Twitter's board has accepted billionaire Elon Musk's offer to take the company private, after two weeks of intrigue and the creation of a "poison pill" meant to kill the deal.
Sources close to the situation have told the New York Times that a deal was likely to be announced as soon as today, a week after Musk announced he had secured financing to fund the $46.5 billion buy-up of all Twitter stock.
Two weeks ago, Musk announced his unsolicited offer to buy all Twitter shares at a price of $54.20 a share — a premium on what they were valued at at the time but well below the $60 range that Twitter shares reached in the fall of 2021. Many speculated that this was all an elaborate game on Musk's part, and another one of his Twitter stunts. But Musk has proven serious in his intentions, and he claims to know better how to run the company than Twitter's board has been doing thus far.
In comments after announcing his offer, Musk said that “it’s really important that people have the reality and the perception that they are able to speak freely within the bounds of the law" on what he sees as the globe's "de facto town square." And, Musk said, "My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization."
Many Twitter employees are not that pleased about Musk's offer, or his talk of stripping Twitter of the moderation measures it has adopted to tame the chaos of a freewheeling, no-holds-barred, shouting chamber that's rife with abuse, racism, and a whole lot of rage.
And as the Times notes, if Musk succeeds, this will pretty well kneecap Donald Trump's Truth Social, which has had a hobbled and seemingly inept launch, and which had billed itself as a version of Twitter without censorship or moderation. Trump has, disingenuously, recently said that he wouldn't rejoin Twitter even if he were allowed to.
Musk probably doesn't intend to do away with content moderation. As he tweeted last week, "A social media platform’s policies are good if the most extreme 10% on left and right are equally unhappy." But that's not to say the man has actually, thoroughly thought through any of this.
The enormous task of content moderation moving forward, and the possibility of government regulation, has likely scared off most other suitors who could acquire Twitter. As Wedbush Securities analyst Dan Ives tells the Associated Press, "The Twitter Board could not find a white knight and with Musk's financing detailed the clock has essentially struck midnight for the board which is why negotiations have begun to get a deal done."
The "poison pill" strategy that Twitter's board adopted two weeks ago, which would have triggered stock dilution if one individual or entity acquired 15% or more of the company's stock, appears to be out the window. The board actually may just want to cash out themselves while there's an offer on the table.
"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," Musk said in his original offer letter on April 14. "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."
Making Twitter remain profitable, i.e. keeping advertisers happy, won't be easy if Musk allows too much unbridled free speech, especially when it's hateful and/or racist. And its entirely unclear what Musk thinks was a step too far in limiting "free speech" on the platform, or what kinds of changes will "unlock" Twitter's "extraordinary potential" as Musk thinks he knows how to do.
Who knows?! This could be the worst investment Musk ever makes!
Twitter's stock price was up 4% Monday morning, trading at $50.87 a share as of this writing, so still well below the $54 price Musk was offering.
Update: Twitter's board has accepted Musk's "best and final" offer of two weeks ago, and the company will officially become a private entity in the coming weeks or months. Twitter's shareholders will still have to vote to accept the deal.
The company issued this statement:
"Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter will become a privately held company."
Twitter's stock was halted temporarily on the news, but it has resumed trading and it up 6% and counting — but still has not reached $54/share.
Musk issued a statement saying, "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. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it."