Elon Musk, a billionaire, agreed to acquire Twitter for $44 billion last week, the popular social media network he uses to interact with his almost 89 million followers.
On April 25, Twitter announced that Musk had agreed to purchase the firm for $54.20 per share in cash. The purchase price is 38 percent more than Twitter's final stock price on April 1, when Elon Musk, the CEO of Tesla, SpaceX, and other firms, announced he holds more than 9% of the company. If the purchase goes through, Twitter will become a private corporation, ending its time as a public firm.
Musk's Purchase of Twitter is Estimated to Be Worth $44 Billion
Elon Musk has agreed to acquire Twitter for $44 billion, making him the world's richest person. With over 89 million Twitter followers, Elon Musk has stated that he intends to "change" the social media network by making it private.
Musk stated, "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. Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it."
The purchase, which has received full official approval, is likely to be finalized this year, subject to a vote of Twitter investors and regulatory clearances.
The historic deal brings to a close what had appeared to be an implausible endeavor by Musk to acquire the social media business — and instantly raises concerns about what he would do with the network and how his actions will impact global online expression. The tycoon, who has over 89 million Twitter followers and has romped through the network throwing insults and jokes, has stated repeatedly that he wants to "change" the platform by encouraging greater free speech and allowing users more control over what they see. Musk could work on the service away from the prying eyes of shareholders, regulators, and others by turning the firm private.
However, there will certainly be a lot more scrutiny. Twitter is not among the most popular social media network (it has more than 217 million daily users, as opposed to billions on Facebook and Instagram), but it has played a significant role in defining global narratives. Politicians have used it as a voice, while businesses, celebrities, and others have utilized it to develop their image and reputation.
Twitter has become a flashpoint for controversy in recent years, as some users have propagated disinformation and other poisonous content on the platform. Before being banned from Twitter following the January 6 incident at the Capitol last year, former President Donald J. Trump routinely used the medium to criticize and inflame. To deal with unanticipated scenarios, the organization has been compelled to adopt regulations on the fly on several occasions.
Twitter's chairman, Bret Taylor, said the board had "conducted a careful and exhaustive process to review Elon's proposal with a purposeful focus on value, clarity, and finance" in a statement. The potential agreement will provide a significant cash premium to Twitter investors, and they think it is the best way ahead for the company's stockholders.
Musk has had a tumultuous history with internet expression. He sought to shut down a Twitter account that followed his private jet's travels this year, claiming privacy and safety concerns. He wrote on Monday that he wished his harshest detractors would stay on Twitter because "that is what free speech means."
"Without any circumstances for Musk to buy Twitter, including the platform's community guidelines and resorting to banning users who breach those standards, Twitter could set a bad precedent for other social media platforms to follow," said Bridget Todd, general manager of the women's rights organization UltraViolet. "This is a dangerously slick slope."
Twitter is being questioned regarding its economic practices and its free speech concerns. For years, the firm has battled to attract new customers and retain existing ones. Twitter's ad business, which is its primary source of revenue, has been unreliable. For 8 of the last ten years, Twitter has not made a profit.
What Exactly is Musk Purchasing? A Social Enterprise with Intermittent Profits
Twitter is a powerful social media platform that influences many people in business, politics, and society. It's a periodic lucrative business with unpredictably fluctuating cash flow.
Elon Musk was probably not drawn to Twitter because of its financial possibilities.
He added at a meeting shortly after making his offer, "I don't care about economics." Musk emphasized freedom of speech, open-source analytics, and other non-financial aspects of Twitter's business in a press release announcing the board's acceptance of his bid, saying they have "tremendous potential."
On Thursday, Twitter will release its first-quarter profits. According to FactSet, analysts predict the business to have had a profit of about $40 million on $1.2 billion in sales. The same year, Twitter recorded a profit of more than $140 million.
More importantly, analysts predict Twitter to have generated $230 million in free cash flow in the first quarter, slightly more than last year, as it intends to leave on billions in debt obtained by Musk to fund his purchase.
Twitter Employee’s Response to the Meeting
On Monday afternoon, Twitter's CEO, Parag Agrawal, met with workers to address the social media firm's sale to Elon Musk. For the staff question-and-answer discussion, Mr. Agrawal was joined by Bret Taylor, the head of Twitter's board of directors.
Workers quizzed Mr. Agrawal and Mr. Taylor for over an hour about how the purchase came to be, what would happen to their pay and employment, and how Musk would transform Twitter.
As per two people who attended the meeting but were not permitted to talk publicly, Mr. Agrawal added, "It's important to acknowledge that you have many different feelings about what is happening." "Some of you are concerned, some are excited, and some are waiting to see how this goes. I know this affects all of you personally." and I want to acknowledge it." Mr. Taylor remarked. A spokeswoman for Twitter declined to comment on the meeting.
Employees were irritated that Twitter management remained mute while negotiating the agreement's details with Musk, who has stated that he intends to overhaul many aspects of Twitter's operations, including the procedures it uses to censor messages. Musk said in a statement released Monday that he would concentrate on "new features, making the algorithms open source to boost confidence, combating spam bots, and authenticating all people.
Employees at Twitter have been concerned about the impact of Musk's transformation of Twitter into a private firm on their stock pay, as well as the cultural shifts he would bring about. On the other hand, others have praised Musk's bid for the firm and predicted a favorable impact.
When the agreement with Musk is complete, which he estimates would take 3 to 6 months, Mr. Agrawal informed staff that their share options would convert to cash. As per two people involved in the conversation, Mr. Agrawal said employees would get the same compensation packages for a year after the sale.
Mr. Agrawal deferred to Musk, who will address the matter after he takes over the firm, in response to a query from a worker about whether former President Donald J. Trump will be allowed back on Twitter. Mr. Agrawal stated that they continually update their policies. They have no idea where this firm will go after the sale is completed.
Employees were concerned about Mr. Taylor's quietness, which he addressed. "I know there were a ton of twists and turns along the way, all of it in public, and I know we weren't able to share all the info with you," he said, adding that he and Mr. Agrawal were compelled by their fiduciary obligation to shareholders to remain silent and not share updates with staff.
Mr. Taylor stated that the board of directors would be removed when Twitter went private. Although the board used a defensive measure known as a "poison pill" to prevent Musk from acquiring more Twitter shares, Mr. Taylor insisted that the action was not meant to prevent Musk from buying the firm but rather to return control of the negotiating process to the board.
Mr. Agrawal instructed staff to keep working on their existing projects and that he would attempt to set up a time for them to ask Musk questions. He confirmed that he would continue to serve as CEO, at least until the agreement with Musk is completed.
Mr. Agrawal said of Musk, "He wants Twitter to be a strong, positive force in the world, just like all of us," emphasizing that he had only spoken with the billionaire a few times and was making conclusions based on those talks. "He believes Twitter matters."
"How we run the company, the decisions we make, and the positive changes we drive — that will be on us, and under our control," he said, urging staff to "operate Twitter as we always have."
Former Officials Said Regulators are Unlikely to Stop Musk from Buying Twitter
The scale of Elon Musk's Twitter acquisition will necessitate submission of the agreement to the Federal Trade Commission (FTC) or the Justice Department for consideration.
Former antitrust authorities warned that while regulators may look at Elon Musk's purchase of Twitter, they are unlikely to sue to stop it.
Antitrust enforcers will "look hard to see whether there is a risk to competition and to consumers," according to Bill Baer, who directed the Justice Department's antitrust division during the Obama administration. Because of the large price tag, almost $44 billion, Twitter and Musk will have to submit the purchase for approval by the Justice Dept or the Federal Trade Commission, the two authorities that oversee acquisitions.
Officials from both companies have promised to investigate how mergers and acquisitions fuel dominance in the technology sector. The FTC has filed a lawsuit against Facebook, alleging that the company's purchases of Instagram and WhatsApp effectively eliminated prospective rivals.
However, Musk's purchase of Twitter is not the type of deal that the government generally opposes. When a firm buys a competitor, the government frequently intervenes. It also disputes agreements where the buyer may gain an unfair advantage in another section of its business due to the acquisition. Musk's two largest assets, the electric automaker Tesla and the rocket business SpaceX, aren't competitors with Twitter, and it's unclear whether he'll try to link them to it in any way.
"It seems to me he has a major stake in two transportation companies at the moment," William Kovacic, a former FTC head, said. "And it's hard to see how Twitter has much to do with either one of them."
Twitter is Most Likely to Go Private
Musk has stated that one of the reasons he wanted to buy Twitter is because the adjustments that need to be done to the network can only be accomplished if it is a private corporation, in his opinion.
Musk shares this attitude with Jack Dorsey, Twitter's co-founder and former CEO, who tweeted on Monday that the firm "has been controlled by Wall Street and the ad model." Going private, according to Dorsey, is the "right first step."
Even though Twitter's board of directors overwhelmingly authorized the sale, it still has to be authorized by investors and is subject to regulatory approval. According to CEO, Parag Agrawal, the purchase is expected to be finalized in the next three to six months.
"Shareholders are going to have to look at whether or not they think this is the best deal they can get with Twitter or whether they can do better without Musk," says Eleanor Bloxham, CEO of corporate advice company The Value Alliance, in an interview with CNBC Make It.
Musk is Looking for Substantial Changes
Musk has characterized his Twitter pursuit as required to protect "free expression." He has previously criticized Twitter, claiming that the network stifles free expression and participates in "censorship," though he has not said what he wants to alter.
He told in recent weeks that he may relax Twitter's content moderation measures and scale down attempts to purge the network of bad actors who break the service's rules. Musk has also stated that he does not want anyone to leave Twitter because of his ownership.
On Monday, he wrote, "I hope that even my worst critics remain on Twitter." "Because that is what free speech means."
However, content monitoring isn't Musk's sole passion. Here's what else he's indicated he'd want to see changed on Twitter.
- He's requested the installation of an edit button, which Twitter claims is in the works.
- He wants Twitter Blue subscribers to be able to pay using his preferred cryptocurrency, dogecoin.
- He believes that Twitter's algorithm, which selects which postings are visible to users, should be made open source to "boost trust" in the network.
- He claims that Twitter should "or perish trying" to eradicate the spambots that plague its site and that it would "authenticate all actual humans" with some verification badge.
Twitter Appears to Be the One Definite Thing
Bloxham claims that "Twitter has never witnessed the amount of volatility that they are likely to encounter going into the future." "If Twitter employees can't take it, then think they should prepare their resumes."