Billionaire entrepreneur Elon Musk agreed to buy Twitter for $44 billion, using one of the largest leveraged buyout deals in history to take private a 16-year-old social networking platform that is a hub of public discourse. and a flashpoint in the online freedom of opinion debate.
Investors will receive $54.20 for every Twitter share they own, the company said in a statement Monday. The price is 38% higher than the stock’s closing price on April 1, the last business day before Musk disclosed a significant stake in the company, sparking a stock rally. Twitter shares were shut down for the news.
Musk, one of the most prolific Twitter users with more than 83 million followers, started amassing a stake of about 9% in January. In March, he had stepped up his criticism of Twitter, claiming that the company’s algorithms are biased and its feeds are full of automated junk messages. He also suggested that Twitter’s user growth was being inflated by bots. After turning down an invitation to join the company’s board of directors, he offered to keep Twitter private on April 14, saying he would make the platform a bastion of free speech and other hint about the changes he would make as owner.
Ideas ranged from the practical — let’s say letting users edit tweets and counter the spread of bots — to the quirky, like a proposal to convert the company’s San Francisco headquarters into a shelter for the homeless.
“Freedom of speech is the foundation of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are discussed,” Musk said in Monday’s statement. “Twitter has tremendous potential – I look forward to working with the company and the user community to unlock it.”
The deal was unanimously approved by the company’s board of directors and is expected to close later this year. Musk secured $25.5 billion in debt and margin financing and will provide approximately $21 billion in equity to fund the deal, according to the statement.
Going private marks a dramatic turnaround for a company that started as a messaging service for sharing your status updates with friends, but quickly evolved into a way for people to broadcast short messages of 140 characters or less to a public following. Twitter caught fire among politicians, celebrities and journalists, taking its place alongside social media luminaries Facebook and YouTube as a standard bearer of a new, more interactive way of using the Internet that came to be known as Web 2.0.
Founded in 2006, the company has endured a series of crises, including a management upheaval that led to the removal of co-founder Jack Dorsey in the early days of Twitter and his eventual return in 2015. After an initial public offering in 2013, it was considered the company to sell itself in 2016, which attracted the interest of Disney companies to Salesforce. Dorsey tangled up in 2020 with an activist investor who forced Twitter to set specific growth goals and add more governance accountability. That served as a catalyst for Dorsey’s eventual second departure so that he could focus on his other business, the digital payments company Block, Inc.
Last week there was little clarity about whether Musk’s offer would succeed. The 50-year-old billionaire himself mused at a TED event the day it became known that even he had doubts about the prospects. Although the stock initially jumped following news of Musk’s stake in the company, the shares have traded well below its original offer price of $54.20 since the announcement — a sign that investors were skeptical of a deal.
Twitter passed a shareholder rights plan on April 15 — a measure known as a poison pill — to fend off unwanted bidders. The plan is executable if one party acquires 15% of the shares without pre-approval, and it aims to ensure that anyone who takes control of the social media company through open market accumulation pays all shareholders an appropriate control premium, the company said when it announced the plan. †
But a turning point came last week when Tesla’s CEO drafted a financing plan with 12 banks led by Morgan Stanley. Just days after revealing the plan, Musk met with Twitter executives as the company became more receptive to a deal, a person with knowledge of the matter told Bloomberg News on Sunday.