Well, the Twitter / Elon Musk saga just took a wild turn. Elon Musk has launched a bid to buy the company and take it private. In a new filing with the SEC, Musk says the following.
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.
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.
As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.
Twitter has extraordinary potential. I will unlock it.Elon Musk
This statement is bold and aggressive and is a hostile takeover. Musk says if this offer is first and final and if they don’t accept it, he will dump the Twitter stock he recently acquired. For those not playing at home, Elon Musk is the single largest shareholder in Twitter at 9.1%.
The offer is $54.20 per share, a decent premium over the $45.85 price the shares are currently valued at. This is well short of the Feb 2021 high of $73.34.
The purchase would cost Musk more than $40 Billion to acquire and while he says that’d be a cash offer, he’s unlikely to be selling any Tesla stock to make that offer.
- Twitter currently has 396.5 million users
- Twitter brought in $3.72 billion in revenue last year (2020)
- 206 million users access Twitter daily. 75% of them are not based in the US
So will the offer be accepted?
This will certainly be interesting to watch. There are definitely advantages to Shareholders in that the offer is an increase on their current price, but the whole going private piece means your investment will be over if successful.
If the bid fails, it seems likely that Elon is so dedicated to this cause that he would build a new service to compete with Twitter. It is worthwhile remembering that Elon owns x.com and is currently doing nothing with it.
Twitter Investor Relations has now posted confirmation of the offer from Musk and say their board will now meet and carefully review the offer.
Twitter, Inc. (NYSE: TWTR) today confirmed it has received an unsolicited, non-binding proposal from Elon Musk to acquire all of the Company’s outstanding common stock for $54.20 per share in cash.
The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.
It’s worthwhile remembering that just 3 days ago, the CEO of Twitter, Parag Agrawal posted this.