Even Elon Musk was skeptical that he’d win. “I’m not sure that I will actually be able to acquire it,” Musk said in an interview at a TED conference on April 14.
The world’s richest person proved the naysayers, including himself, wrong Monday when he clinched a deal to buy Twitter Inc. for about $44 billion, using one of the biggest leveraged buyout deals in history to take private a 16-year-old social networking platform that has become a hub of public discourse and a flashpoint in the debate over online free speech.
Investors will receive $54.20 for each Twitter share they own, the company said in a statement Monday. The price is 38% more than the stock’s close on April 1, the last business day before Musk disclosed a significant stake in the company.
Reaching the agreement was the culmination of a months-long saga that saw Musk amass 9% of Twitter’s shares; launch a fusillade of criticism at Twitter’s management; rebuff an invitation to join the company’s board; and then announce an offer that many people first construed as a weed joke. Twitter was so cool on the proposal that it adopted a so-called poison pill defense that would effectively dilute Musk’s stake if it got much bigger. Twitter’s board soon came around, persuaded by an elaborate $25.5 billion debt financing plan from Morgan Stanley and a who’s who of other global investment banks.
Getting to yes with Twitter’s directors, though, is only the first step in what’s likely to be an arduous experiment for Musk. The outspoken entrepreneur has hinted at a long list of changes he wants to make at the social-media platform, including removing restraints on speech, while at the same time casting doubt on the advertising model that accounts for the bulk of Twitter’s revenue. He’s on record as saying he’s not in it for the money. “I don’t care about the economics at all,” Musk said at TED.
“Musk is going to want to grow users and monetize, but the challenge of Twitter is that you have a highly engaged base that doesn’t generate a lot of revenue,” said Gene Munster of Loup Ventures. “When Elon talks about unlocking value, is he talking about free speech, or making money?”
While profit may be a luxury for the 50-year-old billionaire, it’s a central concern for the employees that Musk will need to keep Twitter’s engines running. And with Twitter going private, management will no longer be able to use options on publicly traded shares as compensation to lure and retain the hard-to-find coders all too ready to jump ship for a rival.
User growth could also prove tricky. Musk’s promise to ease content-moderation policies is a welcome change for some people, but it has alarmed Black, Muslim, LGBTQ+ and other groups who have voiced worry about increased harassment on the platform.
“The easy for part for Musk was buying Twitter,” Dan Ives, an analyst at Wedbush Securities, said in an interview. “The hard part will be turning it around. It’s a social media arms race, and the advertising model has been lagging. Engagement has been lackluster. Freedom of speech is one thing, but Musk just bet 20% of his net worth on Twitter–and nobody else wanted to buy it.”
Musk reiterated his preoccupation with speech policies Monday in the statement announcing the deal. “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. “Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”
Musk, one of Twitter’s most-watched users with more than 83 million followers, began buying shares in January. By March, he had ramped up his criticism of Twitter, alleging that the company’s algorithms are biased and feeds cluttered with automated junk posts. He also suggested Twitter’s user growth was inflated by bots. After rejecting an invitation to join the company’s board, on April 14 he offered to take Twitter private, saying he’d make the platform a bastion of free speech and dropping other hints about the changes he’d make as owner.
The ideas verged from the practical — say, letting users edit tweets and combating the spread of bots — to the peculiar, such as a proposal to turn the company’s San Francisco headquarters into a homeless shelter.
He hasn’t said who he wants to run the business, but it’s likely Musk himself will have a hand in setting direction. All while he continues to run Tesla Inc., Space Exploration Technologies Corp. and other businesses.
The deal was unanimously approved by the company’s board, and is expected to be completed later this year. Musk, the world’s richest person, secured $25.5 billion of debt and margin loan financing and will provide about $21 billion in equity to fund the deal, according to the statement.
Musk’s deal to buy Twitter includes a provision that the billionaire is required to pay the company a fee if he were to walk away or the deal falls apart, according to people familiar with the matter. The deal does not include a “go-shop provision,” meaning Twitter isn’t allowed to solicit offers from other potential bidders. When they resumed trading after a halt for the news, Twitter shares jumped 5.7% to $51.70 at the close in New York.
Chief Executive Officer Parag Agrawal sent an email to Twitter employees as the news was announced, informing them of a companywide meeting scheduled for 2 p.m. to talk about the deal. “I know this is a significant change and you’re likely processing what this means for you and Twitter’s future,” he wrote. At the all-hands meeting, he sought to reassure workers that until the deal closed, it would be business as usual.
The debate around free speech on social media has been raging for years — some political conservatives say Twitter, Facebook parent Meta Platforms Inc. and other internet companies have too many rules, while liberals don’t think social networks go far enough to prevent hate speech and attacks on their services. It’s a conflict that has led to numerous congressional hearings over the years and a movement to overhaul U.S. regulations around online content.
Read more: Acquiring Twitter vaults Elon Musk into the realm of media moguls
Going private marks a dramatic turnabout for a company that got its start as a messaging service for sharing your status updates with friends, but quickly blossomed into a way for people to broadcast short posts of 140 characters or less to a public following. Twitter caught fire among politicians, celebrities and journalists and took its place alongside social media stalwarts Facebook and YouTube as a standard bearer of a new, more interactive way of using the web that came to be known as Web 2.0.
Following its birth in 2006, the company weathered a series of crises, including management upheaval that saw the removal of co-founder Jack Dorsey in Twitter’s early days and his eventual return in 2015. After an initial public offering in 2013, the company considered selling itself in 2016, drawing the interest of companies from Walt Disney Co. to Salesforce Inc. Dorsey in 2020 tangled with an activist investor that forced Twitter to set specific growth targets and add greater board accountability. That served as a catalyst for Dorsey’s eventual second departure so he could focus on his other company, the digital-payments company Block Inc. Agrawal, formerly the company’s chief technology officer, took the helm in November.
Read more: Jack Dorsey’s post-Twitter quest to become Bitcoin’s spiritual leader
As recently as last week there was little clarity on whether Musk’s bid would succeed. Though the stock initially jumped on news of Musk’s stake in the company, shares have traded well below the original offer price of $54.20 since its announcement — a sign investors were skeptical a deal would come to fruition.
Twitter on April 15 adopted a shareholder rights plan — a measure known as a poison pill — to fend off unwanted bidders. But a turning point came last week when the Tesla Inc. CEO pulled together a financing plan that included 12 banks, led by Morgan Stanley. Just days after revealing the plan, Musk met with Twitter executives as the company turned more receptive toward a deal, a person with knowledge of the matter told Bloomberg News on Sunday.
After accepting Musk’s bid, Twitter locked down changes to its platform through Friday, according to people familiar with the matter, who asked not to be identified because the situation is private. Twitter imposed the temporary ban to keep employees who may be miffed about the deal from “going rogue,” according to one of the people. Many of the company’s employees have expressed uneasiness about the idea of Musk taking charge.