Elon Musk made a contentious offer to buy Twitter Inc. He claimed that the company had extraordinary potential and that he was the one to unlock it. The world’s wealthiest person will offer $54.20 per share of the cash. This is a 54% premium to the Jan. 28 closing prices and a valuation close to $43 billion. Pre-market trading saw the shares of the social media company rise 18%
Musk Elon: SC 13D/A”>filing with the U.S. Securities and Exchange Commission on Thursday, after turning down a potential board seat at the company. On April 4, the billionaire also owns Tesla Inc. Pre-market trading for Tesla shares dropped by 1.5% on the news.
Twitter stated that it would review the proposal and that any response would be in the best interest of all Twitter stockholders.
This latest drama in Musk’s turbulent relationship with Twitter is the bid. He is one of Twitter’s most popular firebrands. He tweets memes and taunts frequently to more than 80 million people. After the announcement of his stake, he was vocal about the changes he would like to see on the social media platform. The company offered him a place on the board, making him the largest shareholder.
Musk immediately made an appeal to other users to discuss possible moves. These included converting Twitter’s San Francisco headquarters to a shelter for homeless people, adding an edit button to tweets, and granting premium users automatic verification marks. Twitter may be dying. This is despite the fact that many celebrities have high followings but rarely tweet.
He is not satisfied with his influence as Twitter’s largest investor and has launched a full-scale takeover. This is the only person who can afford it. According to Bloomberg Billionaires Index, his current worth is $260 billion. This compares with Twitter’s $37 billion market value.
Musk wrote a letter to Twitter’s board stating that he believes Twitter will not thrive or serve its free speech societal imperatives in its current form. Twitter must be transformed into a private company.
It is unlikely that the takeover will be prolonged. Musk stated that if the deal fails, Musk would have to reconsider his position as a shareholder. He said, “Given that I don’t have the confidence or ability to drive the necessary changes in the public markets, and I don’t believe management will allow me to do so, I won’t be able to work.”
According to today’s statement, Musk told Twitter’s board that he believed the company should go private over the weekend.
According to Vital Knowledge’s Adam Crisafulli, the $54.20 per share offer was “too low” and unacceptable for shareholders and the board. He also stated that shares were $70 lower than last year.
Musk is the richest person in the world, but it’s not clear how he will get $43 billion.
Neil Campling, Mirabaud Equity Research’s head of TMT research, stated that “this becomes a hostile takeover proposal which is going to be expensive a serious amount cash.” To fund the transaction, he will need to either sell some Tesla stock or take out a huge loan.
For the bid, Musk hired Morgan Stanley to be his advisor. The offer price also includes the number 422, widely known as a coded reference for marijuana. He also chose $420 to be the share price for Tesla’s possible privatization in 2018, an action that drew scrutiny from the SEC.
Analyst at Wedbush Dan Ives said that there will be many questions about financing, regulatory, and balancing Musk’s time (Tesla or SpaceX) over the next days. “But, based on the filing, it is a now-or-never bid for Twitter to take.”