Musk bids $41 billion in cash to buy 100% of Twitter
Just three days ago, when Elon Musk ended up not joining Twitter's board even with the 9.1% stake in the company that he amassed, one analyst suggested that this was a tactical move on Musk's part. As a board member, he would have been forced to keep his stake capped at no higher than 14.9% of the social media outfit but if he was not on the board, Musk was free to buy all of Twitter.
As the richest man in the world with a net worth said to be as high as $273 billion, Musk could buy Twitter without having to finance the transaction via a loan. And sure enough, this morning the Tesla CEO announced that he is offering to buy the company for $41 billion or $54.20 a share (that price includes a '420' reference to marijuana). That is a 38% premium over Twitter's closing stock price the day before his stake in the company was revealed.
Musk says that he will not raise his bid for Twitter
Musk famously smoked pot while appearing on a Joe Rogan podcast. He is also known for making jokes about cannabis during business discussions, so it is not surprising that he would include a reference to weed in the his bid for Twitter.
Twitter's stock is still well off its all-time high. Image Credit Google
"Twitter has extraordinary potential. I will unlock it," the multi-billionaire said. According to Reuters, Musk told the Twitter board that this is his last and final offer and that if it is rejected, he would reconsider his investment in the company.
In a letter to Twitter Chairman Bret Taylor, Musk wrote, "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."
Twitter has some options. It could try to fend off Musk by putting itself up for sale and try to find a higher bidder. It could reject Musk's offer which would probably lead to a proxy fight in which shareholders get to vote on the deal. Twitter could also use what is known as a 'scorched earth' defense and take action to make the company a less attractive investment for Musk once he buys enough shares to put him over a certain threshold of ownership.
Reuters says that Wall Street's lackluster reaction to the offer implies that Musk has a 29% chance to close on the transaction. Tesla shares were also impacted today dropping 2% on the theory that Musk will have to sell some of his holdings in the company in order to pay for the Twitter bid.
Trump says that he will not return to Twitter if Musk buys the company
The Tesla CEO considers himself to be a free-speech absolutist and has often criticized Twitter for its policies. He has over 81 million followers which ranks him as one of the most popular figures on the platform.
This morning, former President Donald Trump, who was banned from Twitter, Instagram, and Facebook following the January 6th, 2021 insurrection at the U.S. Capitol, said that he will not return to Twitter if the latter is purchased by Musk. During his four years in the White House, Trump used Twitter to make policy announcements.
The New York Post quotes Trump as saying, "Twitter’s become very boring. They’ve gotten rid of a lot of good voices on Twitter, a lot of their conservative voices. It used to be a war on Twitter, but it was a very interesting war…Mentally, we had some pretty good fights. We would go after the progressives, who I call the un-progressives. We’d be fighting back and forth and it was great stuff.
Trump added that "friends of mine" have complained that it’s (Twitter) not the same."
As of the start of this year, 76.9 million people use Twitter in the United States while nearly 59 million in Japan use the platform.
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