Social media deal

Twitter accepts Musk’s $44bn takeover offer

Elon Musk
Elon Musk: Twitter has tremendous potential

Twitter’s board has accepted Tesla founder Elon Musk’s $44 billion offer for the company, avoiding what could have turned into a bitter hostile bid battle.

Musk initially indicated hat he would not use his 9.2% stake, acquired on 4 April, to mount a takeover of the social network. He accepted a board seat in what was seen as a sop to stop him bidding, but he later turned it down in a clear indication that a bid was clearly what he had in mind.

He quickly raised equity and loans with the assistance of Morgan Stanley to propose the $54.20-a-share offer. Twitter sought to protect its independence by mounting a poison pill defence to make any bid costly.

But the company has come under pressure from shareholders as its stock has lost nearly 60% of its value in the 12 months up to Musk mounting his raid on 4 April.

In a statement today, Twitter chairman Bret Taylor said: “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.”

Musk, who is worth $270bn, said: “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.

“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.”

He added: “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 as investors digested the board’s decision, though falling short of Musk’s bid suggests that some investors are holding out for a better offer.

John Colley, Associate Dean of Warwick Business School, former MD of a FTSE 100 company, and a specialist on Mergers and Acquisitions, said: “The price offered by Elon Musk took advantage of the current weakness in technology share prices.

“Twitter was well down from its peak and the share price had halved over the last year. The premium that Musk offered must have been attractive to shareholders.

“However, $44 billion seems a lot to pay for a hobby – even for Elon Musk. One wonders, how much of a plan he has to add value?

“Previous management have struggled to monetise the model and Twitter did not look like making any return until Donald Trump adopted it as his main channel for communicating with the public. The jury is still out on whether Twitter can really compete against Facebook, Google and TikTok.”

Twitter will report first-quarter earnings Thursday morning.

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