Tesla CEO Elon Musk offers to buy Twitter for $43 billion | business news


In just ten days, Tesla CEO Elon Musk has gone from a popular Twitter contributor to the company’s largest single shareholder to a potential owner of the social platform, a whirlwind of activity that could dramatically change the service. given Musk’s self-identification as a free user. absolutist speech.

Twitter revealed in a securities filing Thursday that the sometimes capricious billionaire has offered to buy the company for more than $43 billion, saying the social media platform “needs to transform into a private company” to build trust with its users. .

“This is not a way to make money,” Musk said during an interview onstage at the TED 2022 conference on Thursday. “Having a public platform that is highly trusted and widely inclusive is extremely important for the future of civilization.”

Like other platforms, Twitter has in recent years placed restrictions on tweets that threaten violence, incite hate, intimidate others, and spread misinformation. Such rules played a key role in Twitter’s decision to ban former President Donald Trump following the Jan. 6 insurrection on Capitol Hill in 2021. Musk detailed some specific potential changes on Thursday, such as favoring temporary bans over permanent ones, but you have mostly described your goal in broad and general terms. abstract terms.

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While Twitter’s user base is still much smaller than rivals like Facebook and TikTok, the service is popular with celebrities, world leaders, journalists and intellectuals. Musk himself has more than 81 million followers, rivaling pop stars like Ariana Grande and Lady Gaga.

Twitter shares were changing hands at $44.82 in afternoon trading, up just over 2% and well below Musk’s offer of $54.20 a share. That’s usually a sign that some investors doubt the deal will go through. The stock is still below its 52-week high of around $73.

Musk called that price his best and last offer, although he did not provide details on financing. The offer is not binding and is subject to financing and other conditions.

“I believe that freedom of expression is a social imperative for a functioning democracy,” Musk said at the presentation. “I now realize that the company will not prosper or meet this social imperative in its current form. Twitter must be transformed into a private company.”

Twitter said it will decide whether accepting the offer is in the best interest of shareholders.

Wedbush analyst Daniel Ives said in a note to a client that he believes “this soap opera will end with Musk owning Twitter after this aggressive and hostile takeover of the company.” He believes it would be difficult for other bidders or consortiums to come forward and said Twitter’s board of directors will likely be forced to accept Musk’s offer or start a process to sell the company.

Musk revealed in regulatory filings in recent weeks that he had been buying shares in near-daily batches beginning January 31, ending up with a stake of around 9%. Only Vanguard Group’s set of mutual funds and ETFs controls more Twitter stock. A lawsuit filed Tuesday in New York federal court alleges that Musk illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices.

The US Securities and Exchange Commission could punish Musk for hurting other investors by taking too long to disclose his purchase of Twitter shares, but he’s unlikely to do anything to stop a takeover, said Chester Spatt, a former economist. head of the SEC.

“This will develop reasonably quickly,” said Spatt, now a finance professor at Carnegie Mellon University. The SEC, he said, “influences after the fact for the most part.”

The billionaire has been a vocal critic of Twitter, primarily for his belief that it fails to uphold the principles of free speech. The social media platform has angered supporters of Donald Trump and other far-right political figures who have had their accounts suspended for violating its content standards on violence, hate or harmful misinformation. Musk has described himself as a “free speech absolutist” but is also known for blocking other Twitter users who question or disagree with him.

After Musk announced his involvement, Twitter quickly offered him a seat on its board on the condition that he own no more than 14.9% of the company’s outstanding shares, according to a filing. But the company said five days later that he had refused. The decision coincided with a barrage of now-deleted and not always serious tweets from Musk proposing major changes for the company, such as removing ads, its main source of revenue, and transforming its San Francisco headquarters into a homeless shelter.

The shift prompted CEO Parag Agrawal to warn employees earlier this week that “there will be distractions ahead” and to “tune out the noise and focus on work.”

Twitter hasn’t done as well as its social media rivals and lost money last year. The company reported a net loss of $221 million for 2021 tied in large part to the settlement of a shareholder lawsuit that said the company misled investors about how much its user base was growing and how much users were interacting with its website. platform. Its co-founder, Jack Dorsey, stepped down as CEO at the end of November and was succeeded by Agrawal.

Musk’s more than 81 million Twitter followers make him one of the most popular figures on the platform, rivaling pop stars like Ariana Grande and Lady Gaga. But his prolific tweets have at times gotten him in trouble with the SEC and others.

Musk and Tesla agreed in 2018 to pay $40 million in civil penalties and to have Musk’s tweets approved by a corporate lawyer after he tweeted about having the money to take Tesla private at $420 a share. That didn’t happen, but the tweet sent Tesla’s stock price higher. Musk’s latest issue with the SEC could be his delay in notifying regulators about his growing involvement in Twitter.

Both his 2018 comments about taking Tesla private at $420 a share and his latest offer to take Twitter private at $54.20 a share seemed to jokingly reference the number 420, a slang reference to marijuana.

“I guess you’re free to name whatever price you want,” Spatt said. “You could argue that he is trying to point the finger at the SEC. It is hard to see what the commission could do about it. But I do think his violation of the 10-day disclosure requirement is something substantial.”

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