Elon Musk Files Offer With SEC To Buy Twitter For $41.39 Billion

The crypto-touting tech billionaire is at it again, this time hoping to transform Twitter into a vestige of free speech.

Elon Musk, CEO of Tesla and SpaceX, submitted an official offering with the SEC to buy Twitter for $41.39 Billion, which is overvalued, as a way to make a fast close without negotiation. A voice script of a conversation says it is his “best and final” offer, and that he is “not playing the back-and-forth game”. He continued, “It’s a high price and shareholders will love it.”

KEY POINTS

  • Musk files SEC offering to buy 100% of Twitter shares at $54.20 per share in an all-cash transaction.
  • He further indicated his desire to take the company private to help transform it into a “free speech” platform, citing it is a “societal imperative”.
  • Musk’s offer of a cumulative $41.39 Billion cash is his “final offer” and that he’s not interested in a back-and forth game. This sets the total valuation to over $43 billion.
  • The buyout offer is 49.9% higher than what he paid for the current 73.12 million shares (9.1%) that he already owns in Twitter stock.
  • Musk stated that “in its current form”, Twitter will “neither thrive nor serve this societal imperative”.
  • He stated he may “reconsider” his position as the largest shareholder if the offer is not accepted.
  • The Twitter share price as of his offer was at $51.41 pre-market on Thursday, up 10%, making his offer overvalued with his serious intentions of purchasing the company.
  • Musk hired Morgan Stanley as an advisor for the acquisition.

Musk recently revealed in an SEC filing that he is the majority shareholder in the company, having purchased over 9% of the company’s shares since January of 2022. He was then offered a position on the board of directors, but after some deliberation, he turned down the offer. But his SEC filing indicated he would be taking an active role.

Twitter CEO Parag Agrawal replied to the news over a tweet,

“Elon has decided not to join our board. I sent a brief note to the company, sharing with you all here. pic.twitter.com/lfrXACavvk” – Parag Agrawal (@paraga) April 11, 2022

When the news broke that Musk decided not to join the board at Twitter, many speculated that Musk might make an offer to buy the tech giant, or do a hostile takeover.

When an offer is made to join a board, certain questions are usually asked about the company, such as the relationship between management and the board, the flow of information, and the company’s financial position. Certainly Musk would have inquired about these and other important things when the offer was presented to him.

It is likely that when presented with the offer to join the board, Musk was given disclosures that made him believe that even with the majority share in the company, he would not be able to make enough changes to make it the free speech platform he envisions. He wrote in a letter to the board of directors that he believed Twitter “will neither thrive nor serve [its free speech] societal imperative in its current form. Twitter needs to be transformed as a private company.”

Additionally, Musk’s board seat was conditional on him only acquiring 14.9% of the company, as an attempt to shield Twitter from a hostile takeover. But, Musk’s denial of the offer meant that Musk is still free to acquire up to 100%, which is what he has now offered.

Musk wants to take Twitter private

Musk indicated his desire to take the company private so that he could make the necessary changes to make it a free speech platform, touting his belief that the platform, if managed properly, could be a vestige for free speech around the world. He said,

“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.

However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.

As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. 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 continued, “Twitter has extraordinary potential. I will unlock it.”

The SEC filing showed that Musk hired Morgan Stanley as the acquisition advisor, lending more credibility to the legitimacy of his offer. The filing also describes more of his conversation via text:

“I indicated this weekend, I believe that the company should be private to go through the changes that need to be made. After the past several days of thinking this over, I have decided I want to acquire the company and take it private. I am going to send you an offer letter tonight, it will be public in the morning. Are you available to chat?”

Musk may pull his investment if offer is not accepted

Musk also said that if the offer was turned down, then he would reconsider his position as a shareholder, indicating he may sell the stock and send it plunging to its death if his terms are not met. But he did not intend it as a threat. He said,

“If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.” He continued, “This is not a threat, it’s simply not a good investment without the changed that need to be made. And those changes won’t happen without taking the company private.”

“My advisers and my team are available after you get the letter to answer any questions. There will be more detail in our public filing. After you receive the letter and review the public filings, your team can call my family and office with any questions.”

Trump had said he “probably wouldn’t” rejoin Twitter as it is

Before the offer, President Donald Trump, who was banned in early 2021 and had one of the largest follower bases in history, expressed his thoughts on whether he would rejoin Twitter they offered him to return. He said that he “probably wouldn’t” be interested in returning to Twitter. Moreover, Twitter vetoed a proposal to allow Trump to rejoin twitter, citing that such a decision is “not determined by the board”.

Considering these events, it’s understandable why Musk does not feel that he would be able to implement the changes he needed to make the platform more of a free speech platform, and why he declined to join the board of directors. And, it makes sense why he would make an offer to purchase the company, so that he could make the changes that are needed. Since he suggested that he wanted to make the company private, he could then be able to make the necessary changes to the company to make it an open platform instead of a restricted and dying tech company.

Many users are excited about the possibility of Musk acquiring Twitter, considering the censorship Twitter has been engaging in during recent years, especially against conservatives, such as the banning of President Donald Trump and other government officials. Many are hopeful that this change could save Twitter.

Alternative platforms on the rise threaten Big Tech

With the advent of a proliferation of viable Twitter competitors like Parler, Minds, Gettr, and Gab, which have millions of users and growing, Twitter is starting to be on the way out. More and more people are losing interest in the restricted platform, fearing the continual changes to the Terms and Conditions, reckless banning, and controlled agenda.

But if Musk takes the company private and reverses the direction of the company, it may be just in time to save the company from losing its position to all of its up and coming rivals. Either way, free speech on the internet is growing, and Big Tech is losing the battle. People are continuing to lose faith in the tech giants, and are growing increasingly suspicious of their intentions.

With news like Facebook’s $350 million contributed to a Presidential campaign, of which the legality is questionable, combined with extreme restrictions, people feel that they are losing their voice, and unable to express any dissent on any of the major platforms.

Yet the inverse is true at the alternative sites like Parler, Minds, Gettr, Gab, Rumble, Bitchute, and other major alternative platforms, which generally allow any opinions that are not egregious. Opinions about political parties are not suppressed on these other platforms, lending those users to abandon their Twitter, Facebook, and other major social media sites in lieu of the new generation of free speech platforms.

And with the advent of Web3 which is ready to take the world by storm, if these Silicon Valley tech giants don’t adapt, they will be left in the dust. There will not be restrictions to free speech in Web3, so any platforms like Twitter which insist on being media machines instead of the public square they were designed to be, will fall by the wayside.

Could Musk save Twitter from becoming obsolete?

If there was ever a time and ever a person to do it, it is Musk. Long a proponent of free speech, and wildly popular with the younger crowds, Musk has the capability to do what it takes to save the tech giant from being lost in the ether as the alternative platforms continue to build momentum and users continue to abandon Silicon Valley tech.

If Twitter accepts the offer, it could be the last chance for the investors to profit big from the tech giant. But if they refuse, Musk may pull his investment, and instead invest in his own social media company, providing just another major competitor to Silicon Valley. Recently, Musk expressed his interest in possibly building his own social media platform. Moreover, analysts predict that if the offer is rejected, Twitter stock could crash by 20-30%.

Gettr, a social network that functions much like Twitter, and which was built by someone associated with President Donald Trump, exploded with millions of users in a short period, and is becoming a serious competitor to Twitter. If Musk were to launch his own platform as well, Twitter might not survive another major competitor sponsored by one of the most famous people on the planet. And even if they did survive, Twitter would become a shallow vestige of what it once was.


Update: Saudi Arabian prince who owns a 5% share refuses purchase offer. It doesn’t mean much though. If the board of directors chooses to sell the company, then it can still be sold, and in some cases, the minority shareholders like the Saudi prince can be forced to sell, or may be offered incentives to sell. So, the 5% Saudi prince will have little if any say in the matter.

Update 2: Twitter responds to buyout offer saying it will make a decision in the interest of the company.

Update 3: Vanguard Group, the top shareholder of Twitter before Musk took the spot, just upped their holdings to 10.3%, ousting Musk from the top spot and re-taking the top as #1 shareholder. We don’t know if this will have any effect on Musk’s asking price. Either Vanguard is making aggressive moves to prevent the purchase, or Vanguard is buying out other shareholders to maximize their profits from the sale. Either way, something is going on.

Update 4: on April 25, the Twitter board accepted Musk’s offer to buy Twitter and take it private. The purchase is not yet complete, it will still require shareholder and regulatory approval.

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