Technology

Elon Musk offers to buy Twitter for $41 billion

File photo of Elon Musk. | Photo Credit: AP

Billionaire Elon Musk has offered to buy Twitter for about $41 billion, just days after rejecting a seat on the social media company's board.

Mr. Musk's offer price of $54.20 per share, which was disclosed in a regulatory filing on Thursday, represents a 38% premium to Twitter's April 1 close, the last trading day before the Tesla CEO's more than 9% stake in the company was made public.

Twitter's shares jumped 12% in premarket trading.

"Since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company," Mr. Musk said in a letter to Twitter Chairman Bret Taylor.

“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk says in the filing. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”

The buyout offer from Mr. Musk is just the latest development in his relationship with Twitter. The billionaire revealed in regulatory filings over recent weeks that he'd been buying shares in almost daily batches starting Jan. 31. Only Vanguard Group’s suite of mutual funds and ETFs controls more Twitter shares.

"My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder," Musk said.

Earlier this week, Mr. Musk said he had abandoned a plan to join Twitter's board, just as his tenure was about to start. Taking the board seat would have prevented him from a possible takeover of the company.

Mr. Musk and Tesla in 2018 agreed to pay $40 million in civil fines and for Musk to have his tweets approved by a corporate lawyer after he tweeted about having the money to take Tesla private at $420 per share. That didn’t happen but the tweet caused Tesla’s stock price to jump. Musk’s latest trouble with the SEC could be his delay in notifying regulators of his growing stake in Twitter.

Mr. Musk has described himself as a “free speech absolutist” and has said he doesn’t think Twitter is living up to free speech principles — an opinion shared by followers of Donald Trump and a number of other right-wing political figures who’ve had their accounts suspended for violating Twitter content rules.

Here is a summary of analyst comments:

BEN LAIDLER, GLOBAL MARKETS STRATEGIST, eToro:

"Musk’s offer of $54.20 per share is a punchy 38% higher than when he disclosed his initial stake but is still 30% below the share price highs of last year. This opens a battle for control between new CEO Parag Agrawal, who is trying to engineer a company turnaround, and Musk's view that Twitter will 'neither thrive nor serve (its) societal imperative in its current form’."

MICHAEL HEWSON, CHIEF MARKET ANALYST AT CMC MARKETS:

"The big question for the Twitter board now is whether to accept a very generous offer for a business that has been a serial underperformer and tends to treat its users with indifference.

"Twitter has also come under increasing criticism for its arbitrary censoring of accounts that don’t adopt a particular political narrative, as well as the arbitrary nature of how it verifies users, and deals with fake accounts, over genuine users.

"From customer service to the monetisation of its user base, Twitter has been a serial underperformer for some time. Maybe a shaking up of the status quo wouldn't be a bad thing!

"Whatever your feelings on Musk, he would certainly shake things up, with the only question as to whether he would make things worse or improve them."

(With inputs from AP)


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Printable version | Apr 14, 2022 5:23:02 pm | https://www.thehindu.com/sci-tech/technology/elon-musk-offers-to-buy-twitter-for-41-billion/article65320651.ece