Elon Musk closed a deal to buy Twitter Inc for $44 billion in cash on Monday in a transaction that will shift control of the social media platform populated by millions of users and world leaders to the world’s richest person.
The deal has raised concerns about the direction of the platform, which Musk has said he will use to promote “free speech.” US Republicans have applauded the move, with speculation that former President Donald Trump and other banned activists may return, though Trump has said he will not return.
The company has “locked down” non-essential changes to the platform in a bid to prevent disgruntled employees from trying to sabotage it.
It’s a pivotal moment for the 16-year-old company that emerged as one of the world’s most influential public squares and now faces a host of challenges.
Discussions about the deal, which seemed uncertain last week, gathered pace over the weekend after Musk courted Twitter shareholders with the financial details of his offer.
Under pressure, Twitter began negotiations with Musk to buy the company at the proposed price of $54.20 per share.
“Freedom of expression is the foundation of a functioning democracy, and Twitter is the digital public square where issues vital to the future of humanity are debated,” Musk said in a statement.
Musk celebrated with his first tweet since the deal was reported.
Shares rose 6% on the news to $51.90. The deal represents a premium of about 40% to the closing price the day before Musk revealed that he had bought a more than 9% stake. Still, the offer is below the $70 range that Twitter traded in last year.
On Monday, Musk told his more than 80 million followers that the company has huge potential and that he wanted to improve it by adding new features, making algorithms open source to increase trust and defeat spam bots.
“I think if the company had had enough time to transform, we would have earned much more than what Musk currently offers,” said Jonathan Boyar, managing director of Boyar Value Group, which has a stake in Twitter.
However, he added, “this transaction reinforces our belief that if the public markets do not properly value a company, an acquirer will eventually.”
Musk’s move continues a tradition of billionaires buying control of influential media platforms that includes Rupert Murdoch’s acquisition of the New York Post in 1976 and the Wall Street Journal in 2007 and Jeffrey’s acquisition of the Washington Post. Kisses in 2013.
The transaction was approved by the board and is now subject to a shareholder vote. No regulatory hurdles are expected, the analysts said.
Daniel Ives, an analyst at Wedbush, said the company’s board was “against the wall” once Musk detailed his financing package and no other bidders or white knights emerged.
In a prepared statement, the company said Musk has secured $25.5 billion of debt and margin loan financing and is providing a $21 billion capital commitment.
It was not immediately clear what the breakup fee would be or who would run the new company.
Twitter’s enormous importance as a mouthpiece for politicians, political dissidents, and activists belies its relatively small size.
Although it is only a tenth of the size of much larger social media platforms like Meta Platforms Inc’s Facebook, it is credited with helping spawn the Arab Spring uprising and is accused of playing a role in the 9/6 assault. January 2021. United States Capitol.
After Twitter banned former President Donald Trump over concerns about incitement to violence following last year’s attack on the US Capitol by his supporters, Musk tweeted: “A lot of people are going to be very unhappy with the high West Coast technology as the de facto arbiter of free speech”. .”
Republicans on Monday applauded the news of a possible purchase of Twitter by Musk, betting on Trump’s reinstatement on the service.
Trump, whose company is building a Twitter rival called Truth Social, has said he will not return to Twitter, according to a Fox News interview.
Trump told Fox News that he will formally join his own startup Truth Social over the next seven days, as planned.
“I’m not going to use Twitter, I’m going to stay on Truth,” Trump told Fox News. “I hope Elon buys Twitter because he will make it better and he is a good man, but I will stay on Truth,” Trump said.
The White House on Monday declined to comment on the Musk deal but said President Joe Biden has long been concerned about the power of social media platforms. “Our concerns are not new,” said Jen Psaki, a White House spokeswoman, adding that the platforms must be held accountable. “The president has long spoken about his concerns about the power of social media platforms, including Twitter and others, to spread misinformation.”
Twitter blocked changes to its social media platform until Friday after accepting Musk’s $44 billion offer, making it harder for employees to make unauthorized changes, according to people familiar with the matter.
For now, Twitter will not allow product updates unless they are business-critical.
Product changes will require approval from a vice president, the people said. Twitter imposed the temporary ban to prevent employees who may be upset about the deal from “going rogue,” according to one of the people.
The move underscores Twitter’s bumpy road as it transitions from a public company to a private one owned by the controversial billionaire. Many of the company’s employees have been agitated by the idea of Musk taking over and the changes that may follow.
Musk, 50, is a prolific tweeter and has shared many ideas for the platform, from adding an edit button to turning Twitter’s San Francisco headquarters into a homeless shelter.
Twitter has previously instituted freezes on its code ahead of key events, like the Super Bowl, to ensure continuity on the platform and prevent bugs from appearing.