After rebuffing Elon Musk’s initial overtures, Twitter’s board on Monday said it will take Musk’s $44 billion offer for the company, ending a weeks-long saga over whether the company would accept his unsolicited bid.
“The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing,” Twitter chairman Bret Taylor said in a statement. “The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”
Musk first proposed the $54.20-a-share transaction on April 14, igniting a frenzied few weeks as Twitter leaders and Wall Street rushed to figure out whether Musk was serious or not. As it turns out, he very much is: Musk detailed the financing around the bid last week, some $46 billion from equity and loans put together by Morgan Stanley.
Twitter at first moved to ward off Musk, adopting a poison pill defense meant to make any takeover attempt costly. But Twitter has reportedly been under increased pressure by large shareholders to more fully consider Musk’s bid. The company’s stock has languished in recent months, having lost nearly 60% of its value in the 12 months preceding Musk’s disclosure in early April that he had made a large investment in Twitter shares.
“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 statement. “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.”
Twitter shares rose 5.5% to $51.63 on Monday as investors digested the board’s decision. There remains a gap between the share price and Musk’s offer, a signal investors still believe there’s a possibility something fouls up the deal, which the company expects to close later this year.
From start to finish, Musk’s takeover bid lasted less than a month, a remarkably quick pace. On April 4, he revealed he had built up a 9.2% in the company in recent weeks, immediately making him a player in Twitter’s future. Over the next week, Twitter offered him a board seat; he accepted, then turned it down. He followed that up with his $54.20-a-share proposal a week later, though he didn’t detail how he’d pay for it, usually a key point in hostile bids. By adopting the poison pill, Twitter’s board bought itself some time to gauge Musk’s intentions, complete its own valuation of the company and likely look around for other acquirers, a so-called white knight buyer it would find more suitable than Musk.
“It all came down to no other bidders or white knights emerging in the M&A process and Twitter’s Board back was against the wall once Musk detailed his $46 billion in financing last week to get pen to paper on this deal,” says Wedbush analyst Dan Ives.
Musk has said the platform needs to dramatically alter course, re-centering itself around uncensored free speech. Twitter has longed enjoyed greater cultural cache than business success, and the stock spent many years languishing before the pandemic and renewed focus around growth partly reignited it. But while the shares reached nearly $80 last year, they lost more than half their value over the past few months, at least partly the result of worries around the durability of Twitter’s mobile ads amid a change to Apple’s iOS software.
Twitter will report first-quarter earnings Thursday morning, providing the latest insight on the company’s health and on exactly what Musk has just spent $44 billion on.
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