Lauren Feiner
Published April 25, 2022

Twitter’s board has accepted an offer from billionaire Elon Musk to buy the social media company and take it private, the company announced Monday.

The stock closed up 5.64% for the day after it was halted for the news.

“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 said in a statement included in the press release announcing the $44 billion deal. “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.”

The cash deal at $54.20 per share is valued at around $44 billion, according to the press release. Twitter will become a private company once the deal is complete.

The announcement ends a weeks-long saga Musk kicked off when he disclosed a large stake in the company. Soon after, the company said he would join the board, only for Musk to reverse course on that plan several days later. Then, he offered to buy the company at $54.20 per share, his “best and final.” That offer valued Twitter at about $43 billion.

Assuming the deal closes and Musk takes ownership of Twitter, the company will be controlled by the world’s richest person and someone who’s been a heavy critic of the platform while using it in legally contentious ways, mostly through sensitive posts about his car manufacturer, Tesla. Though Musk has indicated that his primary interest in Twitter has to do with what he views as the company’s censorship of free speech, Musk critics are justifiably concerned that the billionaire’s control over the platform will result in the silencing of their voices and others with whom he may disagree.

Twitter’s board sought to fend off a hostile takeover by adopting a so-called poison pill, or shareholder rights agreement, that would allow other shareholders to buy the stock at a discount should Musk or another person or group acquire more than 15% of outstanding common stock. The plan would dilute that person’s holdings in a strategy commonly employed to prevent unwanted acquisitions.

The board seemed to have two reasons to consider rejecting the deal. The first was that the offer, while priced well above Twitter’s current share price, was arguably too low given it had recently surged above that price tag.

The second was that it was initially unclear how Musk would fund the deal. Despite being the world’s richest person, much of his wealth is tied up in Tesla stock, meaning he would likely have to borrow against his holdings to fund the deal.

But the offer became more concrete once Musk announced in a Securities and Exchange Commission filing that he received commitments for $46.5 billion to help finance the potential deal. That included about $25.5 billion in debt financing from Morgan Stanley Senior Funding and other firms. He said he committed about $21 billion in equity financing.

Musk said in the same filing he was exploring a tender offer to purchase shares of Twitter directly from shareholders.

Musk’s interest in Twitter comes from his own frequent use of the platform. The Tesla and SpaceX CEO often uses his large platform to share jokes, engage with his 83.6 million followers and make business announcements.

The latter has gotten him in some trouble. He came under SEC investigation after tweeting in 2018 that he had secured funding at $420 per share to take Tesla private. The agency charged Musk with securities fraud as a result of those tweets. Musk and Tesla reached a revised settlement agreement over those charges in 2019, which Musk is now attempting to terminate.

Musk said at the TED2022 conference in Vancouver earlier this month that he did in fact have funding secured at the time of that tweet, adding that he was “forced to concede to the SEC unlawfully” in the settlement. The SEC declined to comment on Musk’s remarks at the time.

Shortly after the conference, a court filing from a class-action lawsuit by shareholders against Musk revealed that the judge presiding over that case concluded Musk knowingly made false statements about the funding at the time of the tweet.

Also at the TED2022 conference, Musk shared how he would like to see the platform change under his ownership.

“I think it’s very important for there to be an inclusive arena for free speech,” he said at the time, acknowledging that some content moderation would be needed to deal with explicit calls to violence and ensure the service complied with the laws in the country in which it operates.

He also said he generally would prefer “time-outs” to permanent bans, which could suggest a path for former President Donald Trump to rejoin the platform under Musk’s control. Twitter banned Trump from the platform following his tweets around the Jan. 6 insurrection at the U.S. Capitol, citing “the risk of further incitement of violence.”

Some Republican lawmakers have expressed excitement at the prospect of Musk owning the company after complaining for years of what they say is censorship of conservative voices by mainstream tech companies. Twitter and others have said they do not censor speech based on ideology, but instead enforce their stated community guidelines.

On Friday, House Judiciary Committee Republicans asked Twitter board members to preserve records related to Musk’s bid, setting the stage for a potential congressional probe and subpoenas should the party win back control of the chamber after this year’s midterm elections.

Here’s the full announcement from Twitter:

“Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter will become a privately held company.

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. 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.

Bret Taylor, Twitter’s Independent Board Chair, said, “The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”

Parag Agrawal, Twitter’s CEO, said, “Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.”

“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,” said Mr. Musk. “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.”

Transaction Terms and Financing

The transaction, which has been unanimously approved by the Twitter Board of Directors, is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.

Mr. Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment. There are no financing conditions to the closing of the transaction.

For further information regarding all terms and conditions contained in the definitive transaction agreement, please see Twitter’s Current Report on Form 8-K, which will be filed in connection with the transaction.

First Quarter 2022 Earnings Results

Twitter plans to release its first quarter fiscal year 2022 results before market open on April 28, 2022. In light of the pending transaction announced today, Twitter will not hold a corresponding conference call.

Advisors

Goldman Sachs & Co. LLC, J.P. Morgan, and Allen & Co. are serving as financial advisors to Twitter, and Wilson Sonsini Goodrich & Rosati, Professional Corporation and Simpson Thacher & Bartlett LLP are serving as legal counsel. Morgan Stanley is acting as lead financial advisor to Mr. Musk. BofA Securities and Barclays are also acting as financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.”

This story is developing. Check back for updates.