Pressured by its shareholders, the Board of Directors of the social network has ended up accepting the offer of the richest man in the world.
Elon Musk has gotten away with it and will be the new owner of Twitter. Ten days after the owner of the SpaceX aircraft and CEO of the electric vehicle brand Tesla filed a hostile takeover offer with the United States Securities and Exchange Commission (SEC) worth some $44,000 million, the social network has announced a preliminary agreement for the sale.
The sale price would be the one announced last week: $54.20 per share, the "best and last offer" that Elon Musk was willing to offer. The company's shares have reacted higher since the early hours of today's session on the New York Stock Exchange, rising more than 4.5% to reach $51.92.
According to US media such as The New York Times, Wall Street Journal or CNBC, the 11 members of the Twitter Board of Directors were negotiating with Musk during the early hours of Sunday to Monday. They did it forced by the pressure of the shareholders, since the initial intention of the until now owners was to reject the proposal of the richest man in the world .
Not in vain, only 24 hours after the tycoon's hostile takeover bid, Twitter's management tried to thwart the operation with a mechanism known as the 'poison pill': issuing shares of the company at a discount to dilute the participation of Musk ( maximum shareholder with 9.2% of shares since the beginning of April) and thus make the purchase more expensive.
How will Musk pay for the purchase?
Musk, who has more than 83 million followers on Twitter, declared his intention to buy the company on April 14 to turn it into a private social network. Since then, the tycoon has been very explicit about the changes he wants to introduce: from the demanded button to edit messages to his intention to make a more attractive platform for celebrities, who prefer Instagram to communicate with their fans.
Wall Street quickly rejected his proposal because it was unclear whether he could come up with the cash to do the deal. But the billionaire businessman detailed in his offer before the Securities and Exchange Commission where he would get the money.
He gave Morgan Stanley, his longtime bank, less than a week to come together with the loans needed to buy the social media giant, a source familiar with the situation told Insider. In six days, Morgan Stanley finalized $25.5 billion worth of debt commitments.
The loans include $12.5 billion secured against Musk's Tesla stock and another $13 billion that will be lent to Twitter if Musk succeeds. The remaining $21 billion will come from his own personal fortune.
How will the platform change?
Shortly after Musk himself announced that he wanted to buy Twitter, he was met with a wave of criticism. Although he has always emphasized that he wants to promote freedom of expression, critics tend to fear the opposite. Musk acquisition of Twitter will give him the freedom to make whatever changes he wants to the business.
"Freedom of expression is the foundation for a democracy to function, and Twitter is the digital public square where issues vital to the future of humanity are debated," Musk said.
🚀💫♥️ Yesss!!! ♥️💫🚀 pic.twitter.com/0T9HzUHuh6— Elon Musk (@elonmusk) April 25, 2022
The fears go so far that he could turn the platform into a slingshot for hate messages and fake news. In addition, fraudsters, manipulators and users who have already been excluded could also gain access to the platform again. For example, ex-President Donald Trump, who was banned from Twitter, could become active again on Twitter.
"I also want Twitter to be better than ever by improving the product with new features, making the algorithms open source to increase trust, defeating spam bots, and authenticating all humans," he added.
"Twitter has tremendous potential. I look forward to working with the company and the user community to unlock it."
But how Twitter could really continue under Musk's leadership is still completely uncertain.
Bret Taylor, Twitter's board chairman, said the board had conducted a "comprehensive process" to assess Musk's proposals for the company.
It's unclear who will lead the new company, which is currently run by Parag Agrawal, who replaced co-founder Jack Dorsey last November.
But in his offer document, Musk told Twitter's board of directors: "I have no confidence in management."
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