Elon Musk is purchasing Twitter and turning it into a privately held company.
The company confirmed on Monday that the board of directors of Twitter all approved Musk's bid to buy the social media network for $44 billion.
The transaction puts one of the world's wealthiest people in charge of undoubtedly the internet's most influential platform. Musk, a frequent Twitter user, has slammed attempts to control what people say on the platform.
“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 posted to Twitter. “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.”
When the transaction is completed, Twitter shareholders will receive $54.20 in cash per share of Twitter common stock. It's a 38% premium to Twitter's closing stock price on April 1 — the last trading day before Musk revealed his roughly 9% ownership in 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,” said Twitter board chair Bret Taylor 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 bought a 9% share on Twitter in early April, becoming one of the company's largest stockholders. Following that, Musk and the company have been locked in a corporate struggle over the company's future, with Musk initially consenting to join the board before subsequently launching an acquisition offer, and Twitter attempting to block Musk's acquisition with a corporate tactic known as a "poison pill," which is designed to thwart takeover attempts.
The poison pill was thought to be a stopgap strategy to keep Musk from buying the social media site. The "pill," also known as a shareholder rights plan, would have stopped Musk from buying more than 15% of Twitter shares on the open market by activating a provision that would have allowed Twitter to sell more shares, lowering Musk's holdings' value.
However, on April 20, Musk filed a securities statement revealing that he had secured $46.5 billion in finance arrangements from a group of banks headed by Morgan Stanley in order to finalize a potential transaction. This may have pushed Twitter's board to take Musk's offer more seriously.
Back then, between the time current CEO Parag Agrawal was named as the social media platform's newest Chief and April 14, when Musk disclosed his massive ownership stake, Twitter shares had lost 17 percent of their value.
Jack Dorsey, who co-founded Twitter and served as its CEO until November, applauded the decision, stating that the company had "been owned by Wall Street and the ad model" and that "taking it back is the necessary first step."
"I don't believe anyone should own or operate Twitter in principle," Dorsey remarked. He named Musk the "singular solution" to the problem, saying, "Elon's goal of creating a platform that is 'maximally trusted and broadly inclusive' is the right one."
Lauri Brunner, senior portfolio manager for financial services firm Thrivent's big cap growth fund, which owns approximately $160 million in Twitter stock, said to NBC that considering his track record at Tesla, Musk may serve as a "catalyst" for excellent performance at Twitter. Thrivent is a Tesla shareholder as well.
"I think that Elon is very transparent about his plans and strategy," Brunner remarked.
Derrick Johnson, president of the National Association for the Advancement of Colored People, issued a cautious statement in response to the announcement of the acquisition.
"Do not allow Twitter to become a petri dish for hate speech, or falsehoods that subvert our democracy," Johnson stated. "Protecting our democracy is of utmost importance, especially as the midterm elections approach. Mr. Musk: lives are at risk, and so is American democracy.”