Elon Musk has expressed interest in buying Twitter – it would bring bigger changes than just an “edit” button
(Photo: Britta Pedersen-Pool/Getty Images)
Elon Musk reportedly met with Twitter’s board of directors over the weekend to discuss his $43 billion (£33.6 billion) takeover bid.
Just days after it was announced that Tesla and SpaceX CEO Elon Musk had bought a 9% stake in Twitter, the billionaire offered to buy the social media platform outright.
Following the announcement of the Tesla CEO’s offer, Twitter’s management declared a “poison pill” strategy to thwart a hostile takeover.
However, the financial details of Musk’s offer, revealed to US regulators on Thursday (April 21), prompted Twitter’s 11-member board of directors to seriously consider a transaction.
Here’s everything you need to know about it.
How much does Musk offer to pay?
Musk is offering to buy Twitter for around $43 billion (£33.7 billion) and has proposed to “buy 100% of Twitter for $54.20 (£70.80) a share in cash.”
Funding would come from Morgan Stanley and other financial institutions — other banks involved include Barclays, Bank of America, Societe Generale, Mizuho Bank, BNP Paribas and MUFG.
Morgan Stanley is one of Twitter’s largest shareholders, behind the Vanguard Group and Musk.
Musk said $13 billion ($10 billion) in equity was from him “directly or indirectly,” though he didn’t say where those funds came from.
According to Forbes, Musk is the richest man in the world with a fortune of almost $279 billion (£214 billion).
But Musk’s actions since buying a 9% stake in Twitter have also been described by one expert as evidence that he shouldn’t be given control of the company.
Mike Rhodes, managing director of mobile marketing company ConsultMyApp, said: “It would be just plain ridiculous for Twitter to accept this offer and put itself in the hands of someone who has proven their sporadic nature over the past two weeks.”
Why does Musk want to buy Twitter?
Earlier this month, alongside announcing that Musk had bought a 9% stake in Twitter, it was also announced that he would be joining the board.
But just days later, Twitter boss Parag Agrawal confirmed Musk had changed his mind.
In an offer letter to Bret Taylor, Twitter’s chairman of the board, Musk said he invested in the social media platform “because I believe in its potential to be the platform for free speech around the world.”
“I believe that free speech is a societal imperative for a functioning democracy,” he said, but added, “Since making my investment, I now realize that the company will not thrive or serve that societal imperative in its current form.”
He said the move is his “best and final offer” and if it’s not accepted, “the billionaire will have to reconsider my position as a shareholder.”
Who currently owns Twitter?
There are many shareholders in Twitter Inc., so no single person owns the entire company.
It is a “public” company because its shares are available for anyone to buy on the stock exchange, while it would be a “private” company if owned by just a few individuals or groups.
According to the Wall Street Journal, the group with the largest stake is the Vanguard Group, an American investment firm that is among the largest in the world.
As of April 15, the Vanguard Group is believed to own 82.4 million shares of the company’s stock, or 10.3% of the company.
Musk is the company’s second-largest shareholder. With 73.5 million shares, he owns 9.2% of Twitter Inc.
The remaining shares are held by various financial institutions, including Morgan Stanley and BlackRock Inc.
Jack Dorsey, the original co-founder and former CEO of Twitter, currently owns 2.25% of the company.
What would Elon Musk’s Twitter look like?
Known for his belief in absolute freedom of speech, Musk has indicated that he doesn’t believe Twitter is living up to his principles on the matter.
But a change in Twitter’s policy, prompted by Musk, to relax language rules on the site could pose further problems for the company in an age of increasingly polarized online discourse.
One expert said that Musk’s own history of tweeting could get in the way of the delicate balancing act of content moderation that Twitter is currently engaged in.
“Sowing the seeds to promote ‘free speech’ is one thing, but let’s not forget that Elon’s view of simply speaking out has historically been viewed as reckless by regulators,” said Dan Lane, Sr Analyst at investment and stock trading app Freetrade.
Musk previously ran into trouble with US regulators the Securities and Exchange Commission (SEC) over his own tweets after he was accused of violating trading rules when he tweeted about his business interests.
He has also been accused of tweeting misinformation about Covid-19 after posting in March 2020 that children are “essentially immune” to the disease.
Musk’s stance on free speech is shared by the likes of Donald Trump and a number of other right-wing politicians whose accounts have been banned for violating Twitter’s content rules but who claim to have been the victim of censorship.
Some believe a Musk acquisition could mean a return to the platform for Trump and others, but reintroducing those users would be a highly controversial move and could subject the company and its approach to moderation to further scrutiny.
Infamously, British caver Vernon Unsworth sued the Tesla co-founder after calling him “pedo guy” and “sus” (suspicious) on Twitter after the cave rescue in Thailand in July 2018.
Unsworth lost the case after Musk’s attorneys argued it was nothing more than a playground insult and not an allegation of pedophilia, which a jury agreed to.