Billionaire Elon Musk has offered to buy Twitter for $41.39billion, a regulatory filing showed on Thursday.
Musk’s offer price of $54.20 per share represents a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before the Tesla CEO’s over 9 percent investment in the company was publicly announced. It even appeared to reference marijuana – also known as 420 – a common reference used by Musk on Twitter.
Twitter Inc. said in a regulatory filing on Thursday that Musk, who is the company’s biggest shareholder, provided a letter to the company on Wednesday that contained a proposal to buy the remaining shares of Twitter that he doesn’t already own.
The firm’s board says it will now consider the offer – although Musk could ultimately overrule any decision they make, if shareholders decide to take up his proposal.
The outspoken SpaceX CEO, known for his social media antics, told Bret Taylor, the Chairman of the Board: ‘I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.
‘However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.’
Twitter confirmed on Thursday that it had received the offer, saying in a statement: ‘The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.’
The social media giant will review the offer with advice from Goldman Sachs and Wilson Sonsini Goodrich & Rosati.
If Twitter were to reject Musk’s bid, which analysts argue it cannot afford to do, the billionaire may target stockholders by either seeking proxy votes or purchasing their shares.
Here, DailyMail.com looks at what could happen next – and how Musk could be helped, or hindered, in his bid to buy his favorite social media network…
Elon Musk (pictured on April 7, 2022) has offered to buy Twitter for $41.39billion. Musk’s offer price of $54.20 per share represents a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before the Tesla CEO’s over 9 percent investment in the company was publicly announced
What is a hostile takeover – and what are the details of Musk’s attempted hostile takeover?
Tesla chief Elon Musk has launched a hostile takeover bid for Twitter, offering to buy 100 percent of its stock and take it private, a stock exchange filing revealed.
A hostile takeover occurs when an acquiring company or individual attempts to assume control of the organization against the wishes of its current management, according to Investopedia.
An offer such as Musk’s – which was made out-of-the-blue, and without board approval – can be considered a hostile takeover.
The acquiring party can achieve a takeover by fighting to replace the company’s leadership or, as Musk did, by issuing an offer for the company and attempting to buy the necessary stock on the open market.
Musk has offered to buy the social media platform for about $41billion, saying the social media company he has often criticized needs to go private to see effective changes.
Elon Musk shared news of his bid on Twitter around 7.30am Thursday
His offer price of $54.20 per share, which was disclosed in a regulatory filing on Thursday, represents a 38 percent premium to Twitter’s April 1 close.
‘As a result, I am offering to buy 100 percent of Twitter for $54.20 per share in cash, a 54 percent premium over the day before I began investing in Twitter and a 38 percent premium over the day before my investment was publicly announced,’ the tech tycoon wrote.
The total deal value was calculated based on 763.58 million shares outstanding, according to Refinitiv data.
‘My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,’ he said. ‘Twitter has extraordinary potential. I will unlock it.’
The outspoken Tesla CEO, known for his social media antics, told Bret Taylor, the Chairman of the Board: ‘I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy’
Musk added that his offer was not a ‘threat’, but ‘it’s simply not a good investment without the changes that need to be made.’
‘And those changes won’t happen without taking the company private.’
A hostile takeover typically tales place when the acquiring entity believes the target company is undervalued.
It can also occur when activist shareholders, like Musk, seek to change the organization but are not supported by the target company’s current management or board of directors.
Does Musk have enough available cash to do this? What stands in his favor – and what might hinder his bid?
The world’s richest man is trying to buy all of Twitter, but has not disclosed financing details in his purchase proposal.
Elon Musk, whose net worth is approximately $270billion, has offered to purchase the social media platform in a generous all-cash deal of $41.39billion.
However, the entrepreneur’s wealth is mostly held in Tesla shares, a company that limits how much Musk can borrow against its stock, The New York Times reported.
Musk sold more than $15billion worth of his Tesla shares, about 10 percent of his stake in the electric vehicle maker, late last year to settle a tax obligation.
The billionaire has also burned bridges with several major lenders, such as JPMorgan Chase, which is why analysts allege his choice to have investment bank Morgan Stanley act as the financial adviser for his offer is notable.
Twitter says it will ‘carefully review’ Elon Musk’s offer to buy entire social media network
Elon Musk has launched a hostile takeover bid to take Twitter private in a $41.39 billion all-cash deal, telling the board chairman in an offer letter: ‘Twitter has extraordinary potential. I will unlock it.’
Twitter confirmed on Thursday that it had received the offer, saying in a statement: ‘The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.’
Twitter will review the offer with advice from Goldman Sachs and Wilson Sonsini Goodrich & Rosati.
Musk insisted that his bid was his ‘best and final offer’, adding that ‘if it is not accepted, I would need to reconsider my position as a shareholder,’ a regulatory filing showed.
His offer price of $54.20 per share represents a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before the Tesla CEO publicly revealed his 9.2 percent stake in the company, sending the stock popping.
The offer figure also includes the digits ‘420,’ a reference to marijuana that Musk frequently jokes about.
Musk, who is Twitter’s biggest shareholder, sent his offer letter on Wednesday night, telling the company’s board that ‘it’s a high price and your shareholders will love it’.
The newspaper suggests that someone like Egon Durban, of Silver Lake, may have been a better for Musk’s mission as Durban has experience taking technology companies private. However, Durban is a Twitter director and his firm has a ‘standstill agreement’ with the platform that seemingly ‘limits it from participating in a takeover’.
However, despite his failure to disclose how he would finance the transaction if it goes ahead, analysts allege Musk’s offer is a strong contender.
He made a punchy offer of $54.20 per share which competitors are not likely to match, Wedbush analyst Dan Ives told clients in a note obtained by Fortune.
‘It would be hard for any other bidders/consortium to emerge and the Twitter board will be forced likely to accept this bid and/or run an active process to sell Twitter,’ Ives penned. ‘The next step will be Twitter’s Board officially reviewing the Musk filing/letter and then [it’s] get out the popcorn time as we expect many twists and turns in the weeks ahead as Twitter and Musk walk down this marriage path.’
Ives believes the social media platform will ultimately accept Musk’s bid, but not without first putting up a fight.
Twitter’s board is likely going to first argue that Musk’s offer is too low, noting the bid is about 30 percent below the share price highs of last year when the stock was valued at $73.34 per share.
The board is also likely to pose questions about the ‘strategic course’ of the company under Musk’s leadership, citing previous remarks he has made such as the suggestion to forgo advertising on the platform – Twitter’s main source of revenue.
Twitter leadership may also argue in favor of its ‘long-term growth’ goals that Musk would possibly scrap.
‘While we believe the acquisition price is attractive vs. current estimates, Twitter believes there is still significant long-term growth for both users and monetization,’ Raymond James analysts said in a statement issued to DailyMail.com on Thursday.
‘Twitter is also working to drive more direct response revenues which could also drive material monetization improvements long-term if they can improve execution. As such, we believe Twitter will likely pursue the go alone route for now which could achieve similar or higher share price long-term with improved execution.’
Musk also has a proven track record of success both on and off the social media platform. The billionaire has amassed more than 80 million followers since joining Twitter in 2009 and has used it to make several announcements, including teasing a go-private deal for Tesla that landed him in hot water with regulators.
Since his whirlwind mission to spark ‘significant improvements’ at Twitter became public knowledge nearly two weeks ago, Musk has seen a spike in engagement, gaining between 23,000 and 126,000 new followers daily, according to SocialTracker. His account also saw a 0.57 percent increase in its engagement rate of the last week.
However, he has also been sued by former Twitter shareholders who claim they missed out on the recent run-up in its stock price because he waited too long to disclose his stake.
Twitter’s board is likely going to first argue that Musk’s offer is too low, noting the bid is about 30 percent below the share price highs of last year when the stock was valued at $73.34 per share. The board is also likely to pose questions about the ‘strategic course’ of the company under Musk’s leadership. An interior shot of Twitter’s San Francisco headquarters is shown
Although his other ventures are successful, Twitter leadership is likely to question whether Musk (left) has the capacity to buy out the social media platform because of his commitments as CEO of both Tesla and SpaceX. Twitter co-founder Jack Dorsey (right), who remains on the platform’s board, faced similar questioning when he was considering serving as both the CEO of Twitter and Square. Dorsey ultimately stepped down from Twitter.
Despite his run-ins with the SEC, which includes a probe launched last month relating to potential federal securities law violations, Musk has made both Tesla and SpaceX booming success stories.
Tesla is currently trading at $990 per share and SpaceX, in January, was selling shares at $560 each, CNBC reported. The company, which is not publicly traded, was valued at $100billion.
SpaceX last weekend also successfully brought the first-ever all-civilian crew to the International Space Station to conduct research and assist with more than 25 scientific experiments. The mission was hailed as a milestone in commercial spaceflight.
Although his other ventures are successful, Twitter leadership is likely to question whether Musk has the capacity to buy out the social media platform because of his commitments as CEO of both Tesla and SpaceX.
Twitter co-founder Jack Dorsey, who remains on the platform’s board, faced similar questioning when he was considering serving as both the CEO of Twitter and Square. Dorsey ultimately stepped down from Twitter.
What happens now?
SpaceX boss Elon Musk has launched his bid to take over Twitter, however the company’s Board of Directors still has the right to reject his offer.
The billionaire entrepreneur issued a tender offer Thursday morning to buy all of Twitter’s stock at $54.20 per share, 18.2 percent above the current market price of $45.85 per share.
If the board were to reject Musk’s tender offer, he could then approach the shareholders, who may accept the offer.
Investopedia notes that shareholders often accept the tender offer when it is a ‘sufficient premium to market value or if they are unhappy with current management’.
Musk could also employ a proxy fight in which opposing groups of stockholders attempt to persuade other stockholders to let them use their shares’ proxy votes.
If the Tesla CEO were to acquire enough proxies he could then use them to vote to accept his offer.
If the board were to reject Musk’s tender offer, he could then approach the shareholders, who may accept the offer. Musk could also employ a proxy fight in which opposing groups of stockholders attempt to persuade other stockholders to let them use their shares’ proxy votes. Twitter’s San Francisco headquarters is pictured in July 2021
However, Twitter does have measures in place that could defend the company from a potential hostile takeover.
Twitter bylaws limit shareholders’ ability to call special meetings or call the shots in investor meetings.
The company also has the right to issue preferred shares that would give certain shareholders more voting rights than ordinary shareholders.
It is unclear how many of those preferred shares were issued as Twitter did not immediately respond to DailyMail.com’s request for comment.
Preferred shares or stocks with differential voting rights make it more difficult to generate the votes needed for a hostile takeover, if leadership owns a large enough portion of the shares with more voting power.
Twitter’s board could put a so-called poison pill in place that would prevent Musk or any other entities from buying more shares, however the move would presumably upset investors.
How much of Twitter does Musk own? What is a share currently worth – and how much is he offering per share?
Tech tycoon Elon Musk is the social media platform’s largest shareholder.
He revealed in regulatory Securities and Exchange Commission (SEC) filings over recent weeks that he’d been buying shares in almost daily batches starting January 31, resulting in a 9.2 percent stake in Twitter.
He currently holds 73,486,938 shares of the company, valued at more than $3.3billion, based on the stock’s current market value of $45.85 per share.
He has offered to buy Twitter for $41.39billion, a regulatory filing showed on Thursday.
Musk’s offer price of $54.20 per share represents a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before the Tesla CEO’s over 9 percent investment in the company was publicly announced.
Musk is offering to purchase Twitter for $54.20 per share. The company’s stock is currently valued at $45.85 per share
News of Musk’s potential takeover prompted shares of Twitter to jump nearly 12 percent before the market open Thursday, reaching a high of $53.99 per share
News of Musk’s potential takeover prompted shares of Twitter to jump nearly 12 percent before the market open Thursday, reaching a high of $53.99 per share before dropping back down to $45.85, which is more similar to share prices in recent weeks.
Twitter’s stock value did surge nearly 30 percent in early April after Musk disclosed his stake in the company.
One day letter, Twitter CEO Parag Agrawal announced the Tesla co-founder had been invited to the join the company’s board of directors, a seat he gladly accepted.
By accepting the board seat, Musk was limited in how much of the company’s shares he could own, with a 14.9 percent cap.
However, on Sunday Parag announced Musk had formally declined his board seat.
The entrepreneur signed the new filing with the SEC on Monday indicating he had declined his board seat. The document stated Musk could ‘express his views’ about Twitter’s policies and services to the board or on social media. He could also purchase additional shares or sell Twitter stock, if he saw fit.
Musk became Twitter’s majority shareholder after he acquired 73.5 million shares of the platform. An SEC form in early April (pictured) revealed that Musk began purchasing Twitter stock on January 31 and continued to buy shares during every trading session through April 1
Who are the other shareholders?
Elon Musk is Twitter’s largest shareholder, owning a 9.2 percent stake in the company.
Only Vanguard Group’s suite of mutual funds and ETFs controls more Twitter shares.
The Vanguard Group, Inc. owns an 8.39 percent stake in the company, holding nearly 67.2 million shares.
The company’s mutual funds – Vanguard Total Stock Market Index Fund, Vanguard 500 Index Fund and Vanguard Mid Cap Index Fund – hold a 2.8 percent, 2.21 percent and 1.09 percent stake respectively, CNN Business reported. In total, this is approximately 48.7 millions shares.
Twitter’s other top owners include Morgan Stanley Investment Management Inc. with an 8.08 percent stake, BlackRock Fund Advisors, holding 4.56 percent and SSgA Funds Management, Inc. with a 4.54 percent stake.
The company’s other top shareholders hold between a 1.5 percent and 2.51 percent stake in Twitter.
What happens if investors say no?
Wall Street analysts predict Twitter is likely to reject Elon Musk’s ‘generous offer’ to purchase the company for $41.39billion.
If the Board of Directors does reject his offer, the Tesla boss will have to decide whether or not he wants to continue to up the stakes in his attempted hostile takeover of the company.
‘The big question for the Twitter board now is whether to accept a very generous offer for a business that has been a serial under-performer and tends to treat its users with indifference,’ Michael Hewson, Chief Market Analyst at CMC Markets told Reuters. ‘Twitter has also come under increasing criticism for its arbitrary censoring of accounts that don’t adopt a particular political narrative, as well as the arbitrary nature of how it verifies users, and deals with fake accounts, over genuine users.’
He added: ‘From customer service to the monetization of its user base, Twitter has been a serial under-performer for some time. Maybe a shaking up of the status quo wouldn’t be a bad thing!
‘Whatever your feelings on Musk, he would certainly shake things up, with the only question as to whether he would make things worse or improve them.’
Wall Street analysts predict Twitter is likely to reject Elon Musk’s ‘generous offer’ to purchase the company for $41.39billion. They also argue Twitter cannot afford to reject Musk’s bid. The billionaire is pictured at a SpaceX post-launch news conference in January 2020
‘Given the likelihood that Twitter’s board will reject the offer, the question then becomes whether Musk would want to perform a hostile takeover of the company,’ echoed Jesse Cohen, Senior Analyst at Investing.com. ‘Elon Musk’s offer shows that he has very little confidence in current management and does not believe he can drive the necessary change while Twitter is still public, particularly its free speech policies. Now we know the reason behind Musk’s refusal to join the board.’
However, other analysts allege Twitter cannot afford to reject Musk’s bid, arguing the offer – which is 18 percent above where Twitter’s stock closed on Wednesday and roughly 38 percent above where shares were trading before Musk revealed his stake – is too good to pass up.
‘Management is in a tight spot here,’ told CNBC’s SquawkBox Thursday morning. ‘A rebuff would be a powerful mistake … for management.’
Wedbush’s Dan Ives noted that although Musk’s offer is less than Twitter’s 52-week high, it is unlikely the company will get a competing offer.
‘I see no other bidder for Twitter. He went so above and beyond here,’ Ives said.
Other analysts argue that if Musk’s deal were to fall through, it would raise Twitter’s profile as a ‘potential takeover candidate’ for another investor.
‘Elon is not the most predictable human,’ Rich Greenfield, of Lightshed Partners, said, voicing his skepticism. ‘Part of this is, is he even serious. Is this just a game? Is he having fun and making a point about free speech and trying to hold management’s feet to the fire, or does he actually want to own and control Twitter and run it?
‘It reminds shareholders that unlike most of the companies in tech, heck, most of the companies in media land, there’s no control shareholder. You can buy Twitter.’
What do Twitter’s staff make of the takeover bid?
Twitter’s usually vocal employees have remained quiet in wake of Musk’s attempt to buy the company.
However, Haraldur Thorleifsson, a team leader at Twitter, issued several tweets Thursday morning criticizing the billionaire.
‘Just go to therapy dude,’ Thorleifsson wrote, seemingly of Musk.
‘Thousands of amazing people work at Twitter. Their job is to build and maintain a product used by hundreds of millions globally. That is an incredibly hard job and we don’t always succeed. But I’m proud to work alongside them and today I tip my hat in respect.’
Musk, in his bid to takeover the company, argued Twitter is ‘simply not a good investment without the changes that need to be made,’ noting the alleged necessary changes ‘won’t happen without taking the company private’.
Twitter’s usually vocal employees have remained quiet in wake of Musk’s attempt to buy the company. However, Haraldur Thorleifsson, a team leader at Twitter, issued several tweets Thursday morning criticizing the billionaire
Elon Musk is sued by shareholders over delay in disclosing Twitter stake
Elon Musk was sued on Tuesday by former Twitter Inc shareholders who claim they missed out on the recent run-up in its stock price because he waited too long to disclose a 9.2% stake in the social media company.
In a proposed class action filed in Manhattan federal court, the shareholders said Musk, the chief executive of electric car company Tesla Inc, made “materially false and misleading statements and omissions” by failing to reveal he had invested in Twitter by March 24 as required under federal law.
Twitter shares rose 27% on April 4, to $49.97 from $39.31, after Musk disclosed his stake, which investors viewed as a vote of confidence from the world’s richest person in San Francisco-based Twitter.
Former shareholders led by Marc Rasella said the delayed disclosure let Musk buy more Twitter shares at lower prices, while defrauding them into selling at “artificially deflated” prices.
The lawsuit seeks unspecified compensatory and punitive damages.
A lawyer for Musk had no immediate comment. Tesla is not a defendant.
Thorleifsson also implied the tech tycoon was ‘evil,’ saying: ‘Asked my 5yo son what he would do if he was the richest man in the world. He said he’d buy everyone candy.
‘Not all billionaires are evil.’
While Thorleifsson may be one of the only Twitter employees to vocalize his concerns Thursday morning, the social media platform’s staffers have not been silent amid the roller coaster surrounding Musk’s role at the company.
After CEO Parag Agrawal announced late Sunday that Musk had declined a seat on the company’s board, several employees argued: ‘The whiplash is overwhelming.’
The unnamed staffers told Bloomberg that Musk’s constantly changing plans had workers ‘super stressed.’
They were reportedly ‘working together to help each other get through the week.’
The vibe surrounding Musk has been seemingly negative, with multiple workers alleging the situation was a ‘s**t show’.
‘Musk’s immediate chilling effect was something that bothered me significantly,’ Rumman Chowdhury, a director on Twitter’s AI research team, said after the billionaire declined his board seat.
He also criticized Musk’s fans for ‘attacking’ Twitter employees.
‘Twitter has a beautiful culture of hilarious constructive criticism, and I saw that go silent because of his minions attacking employees,’ Chowdhury said.
Other employees also disclosed their agitation with the situation, with one researcher on Monday saying it was ‘the drama that keeps on giving.’
‘My drafts folder deserves agency representation at this point,’ Global Head of Partners Lara Cohen said.
‘Can’t wait to discuss this with my passionate, hard-working, and dedicated colleagues that show up to work every day, even if it’s not in an office,’ Ej Samson, who works in the company’s marketing department, wrote.
Twitter researcher Matt DeMichiel simply shared an image of cartoon character SpongeBob SquarePants face planting in the sand.
A Twitter staff researcher on Monday called the situation surrounding Musk a ‘drama that just keeps giving’
Ej Samson, who works in the company’s marketing department, appeared eager to discuss the situation with his coworkers in a tweet published Monday
Global Head of Partners Lara Cohen made a seemingly snarky remark about the situation on Monday, saying: ‘My drafts folder deserves agency representation at this point’
Twitter researcher Matt DeMichiel on Monday simply shared an image of cartoon character SpongeBob SquarePants face planting in the sand
However, employee conversation surrounding Musk’s involvement with Twitter has included messages of both serious uneasiness and mockery.
After news broke of the Tesla CEO’s $3billion investment in the platform, Cohen took to Twitter saying: ‘Good morning to our new overlord!’
DeMichiel shared a meme featuring rapper Drake that seemingly implied Musk would move the company’s focus from growth, product innovation and sustainability to ways to further financial success.
‘Elon Musk just (temporarily at least) made me a lot of money. And I still dislike him,’ added Haraldur Thorleifsson, a Twitter team lead, referencing how news of Musk’s stake and board membership prompted a nearly 30 percent surge in the company’s stock value.
Michael Sayman, a company product lead, took to the platform to share a meme allegedly depicting the next company board meeting.
The post featured a group attending a meeting with Wario, the antagonist in Nintendo’s Mario series, sitting at the head table. The meme was captioned: ‘Twitter’s next board meeting’.
DeMichiel, who shared the Drake meme, also responded to a commenter asking if employees were required to include Musk on all work-related communications.
He answered: ‘That and all email signatures have to link to Tesla’s website.’
Although most responses featured targeted sarcasm, EJ Samson, a member of the platform’s marketing team, issued a more neutral response, questioning Musk’s role at the company.
Retweeting a poll the SpaceX CEO had posted asking if users wanted an edit button, Samson replied, via meme: ‘What is happening?’
Lara Cohen, the company’s Global Head of Partners, compared Musk to a feudal lord last week after news broke that he had become the platform’s largest shareholder
Company researcher Matt DeMichiel last week shared a meme featuring rapper Drake that seemingly implied Musk would move the company’s focus from growth, product innovation and sustainability to ways to further financial success
DeMichiel also responded to a commenter asking if employees were required to include Musk on all work-related communications
Haraldur Thorleifsson, a Twitter team lead, last Monday referenced how Musk’s stake and board membership prompted a surge in the company’s stock value
Michael Sayman, a company product lead, last Monday compared Musk to Wario, the antagonist in Nintendo’s Mario series
EJ Samson, a member of the platform’s marketing team, last Monday seemingly questioned Musk’s role at the company
Musk himself has taken a seemingly laissez-faire attitude about his intentions for the company, telling his followers last Thursday morning that Twitter’s next board meeting was ‘gonna be lit’ by sharing an image of himself smoking a blunt on Joe Rogan’s podcast in 2018.
Obviously, Musk did not attend said meeting as he declined his invitation to join the board.
Around the same time, Musk also made a post appearing to show the domino effect of selling his first company Zip2 – which provided and licensed online city guide software to newspapers – to Compaq in 1999 to Twitter creating an edit button.
Zip2, which is recognized as the entrepreneur’s biggest failure, sold for $307million, earning Musk $22million for his 7 percent share of the venture when he was only 27 years old.
The meme seemed to imply that sale spearheaded his success and allowed him to become Twitter’s largest shareholder.
Elon Musk took to Twitter last Thursday morning to inform his more than 80 million followers that social media platform’s next board meeting was ‘going to be lit’
Musk also shared a meme last Thursday showing how the sale of Zip2 in 1999 caused a domino effect that led to his involvement at Twitter