The acquisition adopted weeks of evangelizing on the need of “free speech,” because the Tesla CEO seized on Twitter’s function because the “de facto city sq.” and took umbrage with content material moderation efforts he views as an escalation towards censorship. He stated he sees Twitter as important to the functioning of democracy and stated the economics aren’t a priority.
Possession of Twitter offers Musk energy over vastly consequential societal and political points, maybe most importantly the ban on former president Donald Trump that the positioning enacted in response to the Jan. 6, 2021, Capitol riot.
Below the phrases of the deal, Twitter will turn into a non-public firm and shareholders will obtain $54.20 per share, the corporate stated in a information launch. The deal is anticipated to shut this 12 months.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital city sq. the place issues very important to the way forward for humanity are debated,” Musk stated within the launch. “I additionally wish to make Twitter higher than ever by enhancing the product with new options, making the algorithms open supply to extend belief, defeating the spam bots, and authenticating all people.”
“Twitter has super potential — I sit up for working with the corporate and the group of customers to unlock it,” he added.
Musk‘s Twitter deal additional expands his portfolio past rocket firm SpaceX, which has aspirations of touchdown on Mars, and carmaker Tesla, which pushed electrical autos into the mainstream.
“He’s extra highly effective than international locations now,” stated Ross Gerber, a Tesla investor near Musk who stated he had purchased Twitter shares final week in hopes the deal went by way of. “He has a very powerful expertise asset in America … most likely one of the strategic army belongings on the earth … and now he has one of the necessary communications instruments on the earth.”
Musk’s positions on free speech and how you can police the positioning have put him comparatively at odds with present Twitter management, elevating questions on how he’ll search to steer his adjustments by way of and whether or not they’ll have an effect on Twitter’s present govt make-up.
That was a significant subject at a city corridor held by Twitter management Monday, throughout which staff questioned what Musk’s possession would possibly imply for the corporate, in accordance with a document of the decision obtained by The Washington Submit. Staff expressed fears about every little thing from layoffs to the way forward for the enterprise as to whether Twitter will proceed to generate income from promoting.
Staff requested why CEO Parag Agrawal “trusted” Musk, and the way Musk “can be held accountable” when, as a non-public firm, Twitter would haven’t any board of administrators. Executives provided assurances however few direct solutions, and stated that enterprise would proceed as standard till the deal goes by way of inside three to 6 months.
Twitter co-founder Jack Dorsey, who served as CEO till Agrawal succeeded him late final 12 months, stated of Musk, “Elon is the singular resolution I belief” with regard to the “drawback of [Twitter] being an organization.” Dorsey was arguing that Twitter ought to the truth is be a public good, however stated clawing it again from Wall Avenue was the precise preliminary step.
“I belief his mission to increase the sunshine of consciousness,” he wrote.
Musk has stated he would open up Twitter’s algorithm, placing content material moderation selections into clear view, though some researchers have stated that may be tough. He has additionally pushed for easy, broadly widespread adjustments equivalent to including an edit button, in addition to pledging to remove spam bots. And he has stated he desires to open up Twitter’s verification course of to extra customers, so the authenticity of accounts might be decided extra simply.
Whereas it’s unclear how Musk would possibly handle the Trump ban, he stated at a TED convention this month he would wish to be “very cautious” with everlasting bans, preferring timeouts as a substitute.
He and Trump have discovered areas of settlement prior to now. Musk thanked Trump on Twitter for his help when Musk defiantly reopened Tesla’s Fremont, Calif., manufacturing plant in Could 2020, in violation of county-level coronavirus shelter-in-place orders.
Musk, an avid Twitter consumer with greater than 83 million followers, earlier on Monday hinted {that a} deal was shut, laying out his imaginative and prescient for the way forward for Twitter in a noon tweet. “I hope that even my worst critics stay on Twitter, as a result of that’s what free speech means,” he wrote.
I hope that even my worst critics stay on Twitter, as a result of that’s what free speech means
— Elon Musk (@elonmusk) April 25, 2022
The deal would rank among the many largest activist takeovers of a publicly traded firm, in accordance with Dealogic, which tracks information on mergers.
“Twitter has a function and relevance that impacts your entire world,” CEO Agrawal stated within the launch. “Deeply pleased with our groups and impressed by the work that has by no means been extra necessary.”
Twitter board chair Bret Taylor stated the choice got here right down to the economics of the deal. “The proposed transaction will ship a considerable money premium, and we consider it’s the greatest path ahead for Twitter’s stockholders,” he stated within the launch.
Twitter’s board accomplished its overview of Musk’s supply final week, together with developing with doable valuations of the corporate, in accordance with an individual briefed on the discussions who spoke on the situation of anonymity as a result of they weren’t licensed to debate them publicly.
Taylor spoke instantly with Musk on Saturday to replace him on the method, the particular person stated. On the conclusion of Twitter’s board assembly on Sunday, the corporate notified Musk it was able to proceed with a deal round his proposed value, stated that particular person and one other particular person briefed on the discussions who spoke on the situation of anonymity for a similar causes.
The saga of Musk’s Twitter possession kicked off April 4 when Musk stunned traders by disclosing he had taken a greater than 9 % stake in Twitter.
Twitter responded by providing Musk a board seat, which it introduced the subsequent day. Musk turned the seat down just a few days later. By April 13, in accordance with monetary filings, Musk expressed his intention to pursue a hostile takeover of the corporate.
In the meantime, Twitter appeared poised to reject Musk’s bid. The board adopted a “poison tablet” plan the day after Musk‘s supply grew to become public that may make it far more tough for the billionaire to purchase the corporate.
The technique, generally known as a shareholder rights plan, would let traders purchase Twitter inventory at a reduced value unavailable to Musk. The flood of recent shares would doubtlessly make it prohibitively costly for Musk to purchase the corporate.
Musk then publicly outlined his financing, saying final week that he had secured $46.5 billion by way of loans by banks, together with Morgan Stanley, and his personal fairness.
The corporate’s board of administrators met with Musk on Sunday, and negotiations went into the early hours of Monday, in accordance one of many individuals aware of the discussions. The 2 sides had been targeted on figuring out whether or not Musk had the financing to finish the acquisition, and they didn’t spend a lot time discussing Musk’s technique for the way forward for the social community, stated the individuals aware of the discussions.
Nearly the entire key occasions befell over video calls, the individuals stated.
Musk had additionally met privately with a number of giant Twitter shareholders in current days, with some expressing their help for his bid, one of many individuals stated. The 2 sides didn’t see regulatory points, equivalent to an antitrust overview, as seemingly roadblocks to closing the deal, the particular person added.
It’s unclear whether or not Musk will retain different shareholders within the non-public firm. Musk stated beforehand that he would wish to let the utmost allowable variety of shareholders keep on.
One of many components motivating the board’s choice was the current difficult atmosphere for tech shares, which have skilled losses this 12 months after driving excessive throughout the pandemic. The tech-heavy Nasdaq inventory index, which practically doubled from early 2020 to late 2021, has declined 18 % this 12 months. Rising Twitter’s worth past Musk’s providing value would most likely require bucking this development and outperforming a lot of the tech sector, the particular person stated.
Musk taking management will most likely reignite the talk over whether or not social media corporations ought to do a greater job of policing content material equivalent to hate speech and violence, or if they need to take a hands-off method — a tough steadiness for all social media. Twitter began with a hands-off method however has instated extra content material moderation and policing, together with its banning of Trump.
NAACP President Derrick Johnson stated in a press release Monday that “lives are in danger, and so is American democracy.”
“Mr. Musk: free speech is fantastic, hate speech is unacceptable. Disinformation, misinformation and hate speech have NO PLACE on Twitter. Don’t enable 45 to return to the platform,” he stated, referring to Trump.
The Bloomberg Billionaire’s Index places Musk’s price at about $259 billion, however a lot of his wealth is tied up in inventory.
Past the financial institution loans, it’s unclear how Musk intends to pay for greater than $21 billion of the deal which he described as “fairness financing” from himself. He might borrow in opposition to or promote Tesla shares, although that path would increase dangers for the share value of the carmaker.
“If Elon Musk had been pressured to promote shares of our widespread inventory that he has pledged to safe sure private mortgage obligations, such gross sales might trigger our inventory value to say no,” Tesla warned in its annual submitting.
As of Monday afternoon, the proposed deal didn’t embrace a “go store” provision, a typical time period in giant mergers that enables boards of administrators to proceed searching for a better supply from different potential bidders, the particular person aware of the deal stated. The absence of this provision will most likely pace the shut of the deal.
Some Tesla traders have bristled at Musk’s bid as a result of they are saying it distracts from his tasks as chief govt and will sluggish momentum at one of many world’s most respected automakers. And internally, Twitter staff have raised considerations about Musk’s potential impact on the corporate’s tradition.
Musk may be very lively on the platform, having tweeted greater than 17,300 occasions. He averages 125,180 likes per tweet, in accordance with Socialtracker. Musk has earned reward for his wide-ranging method to the positioning: He toggles freely between crude memes concentrating on his rivals, polls on the state of free speech and significant enterprise selections.
His tweets have gotten him into hassle with the Securities and Trade Fee. In 2018, he wrote that he had “Funding secured” to take Tesla non-public at $420 a share.
He stated he selected $420 “as a result of he had not too long ago discovered in regards to the quantity’s significance in marijuana tradition and thought his girlfriend would discover it humorous, which admittedly shouldn’t be an awesome cause to select a value,” in accordance with the federal criticism.
The deal might increase new regulatory points for Musk, too.
Due to the deal’s dimension, Musk might be required beneath federal regulation to report his buy of Twitter to the Federal Commerce Fee and the Justice Division. A number of authorized consultants stated the deal doesn’t current clear antitrust considerations as a result of Twitter shouldn’t be being bought by a social media competitor. However given Democrats’ deal with focus of energy, particularly within the tech sector, it’s doable that authorities regulators might open a overview of the deal and sluggish it down.
“If you happen to’re sitting within the companies, you’re conscious of that environment,” stated William E. Kovacic, a former Republican chair of the FTC.
Regulators might increase objections to Musk doubtlessly collateralizing the acquisition with Tesla inventory, in accordance with former SEC lawyer Tyler Gellasch, who now runs Wholesome Markets, a nonprofit group advocating market reforms.
“That is shopping for a number of one firm by borrowing in opposition to billions of {dollars} in shares of one other firm, and that very concentrated collateral carries dangers,” Gellasch stated. “If it leads the banks to say they’re going to wish extra and completely different collateral, that wouldn’t block Musk’s buy per se, nevertheless it might make the logistics of the deal dicier.”
Reed Albergotti, Elizabeth Dwoskin, Cat Zakrzewski and Tory Newmyer contributed to this report.
