LAST UPDATE | 25 Apr 2022

SOCIAL MEDIA GIANT Twitter has agreed to sell the company to billionaire Elon Musk for $44 billion.

The agreement was a dramatic shift for the board, which had originally maneuvered to block Musk from taking the social media network private.

The agreed sale is worth approximately €38 billion.

“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 joint release announcing the takeover.

“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.”

Under the agreement, Twitter shareholders will receive $54.20 in cash for each share of common stock they own when the transaction is closed.

This is a 38% increase on the share prices the day after Musk announced that he had taken a 9% stake in Twitter.

In the statement, Twitter CEO Parag Agrawal 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.”

The sale was unanimously approved by Twitter’s Board of Directors just days after they had adopted a “poison pill” defence against Musk’s proposal to take over the company.

“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,” said Bret Taylor, Twitter’s Independent Board Chair.

Musk had previously said last Thursday that he had secured close to $46.5 billion to finance the acquisition, but also that he planned to appeal directly to the company’s shareholders as he looks to take over the social media platform.

A team of banks led by Morgan Stanley — which is also acting as Musk’s main advisor on the purchase — will provide debt and margin loan security of $25.5 billion while Musk himself plans to provide $21 billion in equity.

Musk has previously cited concerns over freedom of speech as motivation for buying the platform, though free-speech experts have pointed to Musk’s unpredictable statements and history of bullying critics as contradictory to his stated aims.

He “made his pitch to select shareholders in a series of video calls, with a focus on actively managed funds… in hopes that they could sway the company’s decision,” sources told the Wall Street Journal.

On Wall Street, Twitter stock was trading 5.9% higher at around 7.15pm.

Musk, who has complained of overzealous moderation on the platform, bought a nine-percent stake in Twitter earlier in April, then offered to buy the whole company outright, citing a mission of preserving free speech.

While the firm’s board initially said it was reviewing his offer, it later rebuffed him and adopted a “poison pill” plan that would have made it harder for Musk to acquire a controlling position.

Last week, Musk — whose immense wealth stems from the popularity of Tesla electric vehicles as well as other ventures — said he had lined up financing.

Despite Musk’s wealth, the question of financing had been seen as a potential stumbling block because much of his holdings are in Tesla shares rather than cash.

In a filing, Musk had pointed to a $13 billion debt facility from a financing consortium led by Morgan Stanley, a separate $12.5 billion margin loan from the same bank, as well as $21 billion from his personal fortune as being behind the deal.

Musk’s efforts have raised hopes about the commercial potential of Twitter, which has struggled to achieve profitable growth despite its influential spot in culture and politics.

Under Agrawal, who took over as Twitter CEO late last year, the company has made progress on new monetization features, such as subscription products, Truist securities said in a note, adding that “short term, Musk’s involvement at this stage runs the risk of disrupting those efforts.”

But the polarizing Tesla chief’s campaign has also sparked concern among technology and free-speech experts who point to Musk’s unpredictable statements and history of bullying critics, which contradict his stated aims.

Progressive group Media Matters for America warned that Trump, who was banned from Twitter after last year’s assault on the US Capitol by his supporters seeking to overturn the 2020 presidential election result, could return if Musk’s purchase goes through.

“Any negotiations to sell Twitter to Musk must include clear enforceable mechanisms to uphold and maintain existing community standards, including the removal of those who violate those standards,” the group’s president Angelo Carusone said in a statement. 

© AFP 2022

Additional reporting by Tadgh McNally and Ian Curran