Elon Musk closes deal to purchase Twitter, will take company private

CEO of Tesla Motors Elon Musk speaks at the Tesla Giga Texas manufacturing “Cyber Rodeo” grand opening party on April 7, 2022, in Austin, Texas. (Suzanne Cordeiro/AFP via Getty Images/TNS)


Update: Twitter has accepted Elon Musk’s buyout deal for approximately $44 billion. The purchase price equates to $54.20 per share in the cash transaction.

Here is the full announce from Twitter:

Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter will become a privately held company.

Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter.

Bret Taylor, Twitter’s Independent Board Chair, said, “The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”

Parag Agrawal, Twitter’s CEO, said, “Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.”

“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,” said Mr. Musk. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”

Transaction Terms and Financing

The transaction, which has been unanimously approved by the Twitter Board of Directors, is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.

Mr. Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment. There are no financing conditions to the closing of the transaction. 

For further information regarding all terms and conditions contained in the definitive transaction agreement, please see Twitter’s Current Report on Form 8-K, which will be filed in connection with the transaction.

First Quarter 2022 Earnings Results

Twitter plans to release its first quarter fiscal year 2022 results before market open on April 28, 2022. In light of the pending transaction announced today, Twitter will not hold a corresponding conference call.

Advisors

Goldman Sachs & Co. LLC, J.P. Morgan, and Allen & Co. are serving as financial advisors to Twitter, and Wilson Sonsini Goodrich & Rosati, Professional Corporation and Simpson Thacher & Bartlett LLP are serving as legal counsel. Morgan Stanley is acting as lead financial advisor to Mr. Musk. BofA Securities and Barclays are also acting as financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.

Earlier:

Liana Baker and Michelle F. Davis

Bloomberg News

Twitter Inc. is in the final stretch of negotiations about a $43 billion sale to Elon Musk that could rank as one of the biggest-ever leveraged buyouts of a listed company, people with knowledge of the matter said.

The social media company is working to hammer out terms of a transaction and could reach an agreement as soon as Monday if negotiations go smoothly, according to the people, who asked not to be identified because the information is private. Musk is lining up partners for the acquisition and continues to speak to potential co-investors, one of the people said. The situation is fluid, and talks could drag on longer or fall apart.

Twitter’s board was negotiating with the billionaire Tesla Inc. chief executive officer on Sunday over terms of his unsolicited bid to buy Twitter for $54.20 per share, and talks continued overnight into the early hours of Monday, the people said. Shares of Twitter jumped 3.8% to $50.78 on Monday, still below Musk’s offer price, indicating lingering skepticism over the prospects of an acquisition succeeding, although analysts say it is becoming more likely.

Twitter started warming up to a potential deal after Musk revealed a financing plan that included backing from Morgan Stanley and other institutions. Musk, on Friday, made a pitch to select shareholders in a number of video calls, with a focus on actively managed funds, according to the Wall Street Journal.

Representatives for Twitter declined to comment on status of the talks, and Musk didn’t immediately respond to requests for comment.

While many details are yet to be worked out and events are unfolding quickly, what had initially seemed to be a long-shot deal looked closer to becoming reality.

Musk, who has more than 83 million followers on Twitter, began amassing shares in the company in January, disclosing a 9% stake earlier this month. That position got him invited to join Twitter’s board, an offer he ultimately rejected, only to turn around on April 14 with an unsolicited bid to buy the company and take it private.

His proposal was met with skepticism on Wall Street because, while he said it was his “best and final” offer, it lacked any details on financing. Even though Musk is the world’s richest person, much of his fortune is tied up in Tesla stock.

Twitter adopted a poison pill as a measure to prevent Musk from buying up more than 15% of the company, while giving the board more time to consider his bid and plot its next move.

Late last week, Musk gave more details on his financing plans, saying in a securities filing that he had lined up Morgan Stanley and other lenders, which were offering $13 billion in debt financing plus another $12.5 billion in loans against his stock in Tesla, as well as pledging to contribute an additional $21 billion of his own money through equity financing. It’s unclear whether Musk, who heads Tesla and Space Exploration Technologies Corp., would consider selling part of his stake in one of his prized companies to acquire Twitter.

He currently has about $3 billion in cash or other somewhat liquid assets after spending $2.6 billion buying his Twitter stake, according to Bloomberg calculations. Several possible partners have reached out to Musk to be part of the equity financing, people familiar with the discussions have said.

In a whirlwind of news in just over two weeks, it’s been hard to tell whether Musk, 50, would follow through on his offer. Musk is a prolific tweeter — posting a mix of memes, questions and barbs — and has vowed to turn Twitter into a bastion for free speech. But a previous claim that he had secured funding to take Tesla private, an episode that drew a lawsuit from the U.S. Securities and Exchange Commission, has cast a shadow over his Twitter bid.

Musk is one of Twitter’s most prominent and outspoken users. He is known for sometimes cryptic or mysterious tweets, lobbed at all hours of the day, on everything from cryptocurrencies to space travel to whether Twitter should have an edit button. While Musk has tweeted about plans to authenticate Twitter users and stop paying its board a salary, he’s not publicly outlined much about how he’d manage the company.

He has said his main motivation in buying Twitter is to ensure the principles of free speech, which he says is “essential to a functioning democracy.”

Twitter is scheduled to report earnings on Thursday, “which likely will not be rainbows and smiles thus putting further pressure on the company around this game of high stakes poker with the Musk bid looming,” said Dan Ives, an analyst at Wedbush Securities, in a note to investors on Sunday.

___

©2022 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.