Musk Makes $43 Billion Offer to Twitter to Build ‘Free Speech Arena’

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  • Social media company says it’s evaluating Musk’s offer
  • Musk hints at hostile bid bypassing Twitter board

April 14 (Reuters) – Billionaire entrepreneur Elon Musk targeted Twitter Inc (TWTR.N) with a $43 billion cash takeover offer on Thursday, with Tesla’s CEO saying the social media company must be taken private for grow and become a platform for freedom of expression.

“I think it’s very important that there is an inclusive arena for free speech,” Musk, already the second-largest shareholder of Twitter based in San Francisco, told a TED talk in Vancouver when asked. on his offer.

Musk made the offer Wednesday in a letter to the board of directors of Twitter – the microblogging platform that has become a global medium for individuals and world leaders – and it was made public in a regulatory filing. Thursday. Its offering price of $54.20 per share represents a 38% premium to Twitter’s April 1 close, the last trading day before its 9.1% stake in the social media platform failed. be made public.

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Musk, the world’s richest person with a fortune of $273.6 billion according to a Forbes tally, rejected an invitation to join Twitter’s board on Saturday after disclosing his stake, a move analysts say signaled its takeover intentions because a seat on the board would have limited its stake to just under 15%. Read more

After his TED talk, Musk hinted at the possibility of a hostile bid in which he would bypass Twitter’s board and submit the offer directly to its shareholders, tweeting, “It would be completely indefensible not to submit this offer to a shareholder vote.”

Twitter was evaluating the offer with advice from Goldman Sachs and Wilson Sonsini Goodrich & Rosati, according to a source. The company was also preparing a poison pill as a safeguard against Musk’s increased stake as early as Friday, the source said.

Shares of Twitter closed down 1.7% on Thursday.

Investors were not convinced.

Prince Alwaleed bin Talal of Saudi Arabia tweeted from his verified account about the deal. Describing himself as one of Twitter’s “largest, long-term shareholders”, he said Musk’s offer undervalued the company and he rejected it.

Musk, for his part, told Twitter it was his “best and last offer” and said he would reconsider his investment if the board rejects it. Read more

“That’s no way to make money,” Musk said on TED Talk.

“My strong intuitive feeling is that having a broadly inclusive, maximum-trust public platform is extremely important to the future of civilization,” Musk added.

Musk makes an offer on Twitter

Musk, a self-proclaimed “free speech absolutist”, has been critical of the social media platform and its policies, and recently conducted a Twitter poll asking users if they think it adheres to the principle of free speech. freedom of expression. More than 70% of the 2 million votes cast said “No”.

After Twitter banned former President Donald Trump over concerns about inciting violence following the attack on the US Capitol by his supporters last year, Musk tweeted: “A lot of people are going to be very unhappy with West Coast high tech as the de facto arbiter of free speech.”

In remarks Wednesday – before Musk’s announcement – Trump said he “probably wouldn’t have any interest” in returning to Twitter, where he has more than 88 million followers. Read more

Elon Musk speaks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan January 13, 2015. REUTERS/Rebecca Cook/File Photo

White House spokeswoman Karine Jean-Pierre declined to comment on Musk’s bid for Twitter, saying market regulators operate independently of political leaders.

Twitter employees, some of whom were panicked by Musk’s impact on his ability to moderate content, attended a town hall meeting on Thursday. CEO Parag Agrawal reassured them that the company was not “held hostage” by news of Musk’s offer to buy the company, a source said. Read more

Musk said US investment bank Morgan Stanley was acting as financial adviser to his bid. He didn’t say how he would fund the deal if it goes through, but told the TED Talk hearing that he “has enough assets,” without saying more.

CFRA Research analyst Angelo Zino said Musk could finance the deal with debt and the sale of Tesla stock.

Musk sold more than $15 billion of his Tesla shares (TSLA.O), or about 10% of his stake in the electric vehicle maker, last year to settle a tax liability.

‘UNDERPERFORMING SERIAL’

Twitter’s lower-than-expected user additions in recent months have raised doubts about its growth prospects, even as it pursues big projects like audio chat rooms and newsletters.

Founded barely two years after Facebook, Twitter is overshadowed by the social network. Meta, which owns Facebook, generated $118 billion in revenue in 2021 from 1.93 billion daily users. Twitter generated $5.08 billion in revenue last year from 217 million daily users.

“The big question for Twitter’s board now is whether to accept a very generous offer for a company that has been a serial underperformer and tends to treat its users with indifference,” Michael said. Hewson, chief market analyst at CMC Markets.

Twitter’s stock market value has lagged rivals

Twitter won’t comment on the fate of Musk’s bid on Thursday, according to a source familiar with the matter. What the board is discussing are the parameters of the evaluation process and it would then ask its advisers to review the offer and await the results, the source said.

Musk has amassed more than 80 million followers since joining Twitter in 2009 and has used it to make several announcements. Musk is bound by a 2018 settlement with the U.S. Securities and Exchange Commission requiring him to seek pre-approval on some of his Twitter posts after he tweeted that he had “secured funding” to take Tesla private.

“If he is serious about making Twitter private, his past run-ins with regulators might not be a barrier — but it might make potential funders reluctant to come up with the money for the deal — unless he is. willing to pledge a large portion of its Tesla holdings to secure the debt,” said Howard Fischer, a partner at law firm Moses & Singer and former senior counsel at the SEC.

Musk’s decision also raises the question of whether other bidders could emerge for Twitter.

“It would be difficult for any other bidder/consortium to emerge and Twitter’s board will likely be forced to accept this offer and/or initiate an active process to sell Twitter,” wrote Wedbush analyst Daniel Ives. Securities, in a client note.

Musk admitted at the conference that success was not assured, but his intention was to retain as many shareholders as the law allowed in a private company.

When asked if there was a “plan B” if Twitter rejected the offer, Musk told the TED talk audience without giving details: “There is.”

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Reporting by Chavi Mehta and Uday Sampath in Bengaluru, Greg Romeliotis in New York, Chris Prentice in Washington and Sheila Dang in Dallas; additional reporting by Hyunjoo Jin in San Francisco. Written by Anna Driver and Kenneth Li; edited by Will Dunham, Anil D’Silva, Alexander Smith and Bernard Orr

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