Hostile takeover? World’s richest man Elon Musk offers to buy Twitter for $41 billion, and promises to “unlock” its “extraordinary potential”
Elon Musk’s intentions towards Twitter have been clarified today, after the world’s richest man made an audacious bid to acquire the social platform.
The CEO of Tesla and SpaceX revealed in a regulatory filing that he has offered to buy Twitter for $41 billion in cash, saying the firm he has often criticised in the past, needs to go private to see effective changes.
The SEC filing was made on Thursday, and revealed that Musk is offering $54.20 per share, which represents a 38 percent premium to Twitter’s 1 April close – the last trading day before Musk’s more than 9 percent stake in the company was made public.
Musk is a noted user of Twitter and a fierce critic of the platform, yet despite that he was invited to join its board of directors.
Last month he hit out at Twitter for “failing to adhere to free speech principles” and asked whether a new platform was needed.
But on the same day he was due to join the board, Musk suddenly declined the invitation – a move confirmed by Twitter CEO Parag Agrawal.
Musk not joining Twitter’s board of directors, freed him up to acquire a bigger shareholding in the platform.
Joining the board, would have meant Musk serving on the board until 2024, and agreeing not acquire more than 14.9 percent of the company’s shares.
Therefore, with Musk not joining Twitter’s board, it leaves him free to acquire as much of Twitter as he likes.
And there was some media speculation that Musk could be considering a hostile takeover of the platform.
A hostile takeover occurs when an acquiring company attempts to take over a target company against the wishes of the target company’s management.
Other media reported suggested that Musk could instead become an activist shareholder, using his sizeable shareholding to pressure Twitter’s management and advance his own agenda for the platform.
It has been widely reported that Musk made $156m, by filing a required SEC form 11 days late.
Investors are supposed to notify the SEC within 10 days when they surpass a five percent stake in a company, which Musk achieved on 14 March, meaning the disclosure deadline should have been 24 March.
But Musk didn’t publicly declare his stake to the SEC until 4 April, by which time he had doubled his stake to 9.2 percent.
During that time Musk continued to buy Twitter stock at $39 per share. When he finally went public, Twitter’s share price by 30 percent to over $50 per share, netting him approximately $156m.
This week Musk was sued by a disgruntled Twitter shareholder over this late notification.
Now Musk in his filing has revealed he is making an actual takeover bid for Twitter, and in a letter to Twitter’s chairman, Bret Taylor, the Tesla CEO explained his reasoning.
“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,” wrote Musk.
“However, since making my investment I now realise the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company,” he wrote.
“As a result, I am offering to buy 100 percent of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38 percent premium over the day before my investment was publicly announced,” wrote Musk.
“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 warned. “Twitter has extraordinary potential. I will unlock it.”
There seems to be no public response from Twitter, at the time of writing.
Musk has amassed over 80 million followers since joining the site in 2009 and has used the platform to make several announcements, including teasing a go-private deal for Tesla that landed him in hot water with US regulators.