The world's richest man, Elon Musk, has bought Twitter
"Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction," Twitter wrote in a statement. "The purchase price represents a 38% premium to Twitter's closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter."
Musk's bid to gain power over the social media platform began early this year when he began buying up Twitter stock. On April 4, Musk revealed in a filing with the U.S. Securities Exchange Commission (SEC) that he had purchased a 9.2% stake in Twitter. Soon after, it was announced that Musk would become a member of Twitter's Board of Directors, but that decision was reversed within days.
After Musk confirmed that he would not be joining Twitter's board, he offered to buy the company for $43 billion. The buy-out was temporarily postponed when Twitter initiated a so-called "poison pill", a common tactic that allows certain shareholders to purchase stock at a discounted price in order to stop buyers attempting a takeover from being able to amass more than 15% of the company's shares.
The poison pill was introduced as a stop-gap to give Twitter's board more time to consider Musk's offer. First, there has been some disagreement regarding whether or not Elon's $54.20 per share bid was a fair price given the fact that shares prices reached $70 last year. Also, prior to Twitter's approval of the deal, it was unclear how Musk would be paying for the buyout.
Musk has since submitted a funding proposal with the SEC. $25.5 billion worth of the funding for the purchase will come from Morgan Stanley
After the financing was secured, the offer was unanimously approved by Twitter's board.
"The Twitter Board conducted a thoughtful and comprehensive process to assess Elon's proposal with a deliberate focus on value, certainty, and financing," said Bret Taylor, Twitter's Independent Board Chair. "The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders."
During Musk's consolidation of Twitter stock, he failed to disclose to the SEC when he had surpassed a 5% stake in the company, a violation of SEC rules. Musk was required to reveal his purchase by March 24 but failed to do so until April 4, after he had purchased another 4.2% of shares.
After the purchase was disclosed, Twitter share prices shot up 27%, meaning Musk was able to save more than $150 million by waiting to reveal his stake. As a result, shareholders who sold stock between March 24 and April 4 are being covered in a class-action lawsuit against the billionaire.
Twitter employees have also expressed concern over Musk's takeover of the company. At a company-wide meeting, Twitter CEO Parag Agrawal said that Musk would have control over the future of the company, an attendee told NPR. While Agrawal will remain in place as CEO until the deal is completed, it's unclear what will happen afterward.
"Once the deal closes we don't know which direction the platform will go," Agrawal said regarding Musk's plans.
Given the fact that Musk is already the CEO of Tesla and SpaceX, it's currently unclear just how involved he will be in the running of Twitter. However, he has expressed several plans for the platform, stating that his changes to the platform would decrease "civilization risk".
"Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," Musk is quoted in Twitter's announcement. "I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans."
"Twitter has tremendous potential - I look forward to working with the company and the community of users to unlock it," he continued.
Humans rights experts and advocates have expressed concerns over some of Musk's plans for Twitter, including the loosening of content moderation.
"Without vigorous content moderation, the platform Musk seeks to own would be swamped by spam, porn, anti-vaccination misinformation, QAnon conspiracies, and fraudulent campaigns to undermine the midterms and 2024 presidential election," Paul Barrett at NYU's Stern School for Business and Human Rights told NPR.
Along with more permissive terms of service, Musk may also introduce an edit button, something that experts worry could allow bad actors to cover up abuse and harassment. There have also been widespread theories that Musk will reinstate former-President Donald Trump's Twitter account. The account was permanently banned for allegedly encouraging the January 6 attack on the U.S. capitol.
