The world’s richest person said he’ll pay $54.20 per share in cash, 38% above the price on April 1, the last trading day before Musk went public with his stake. The social media company’s shares were little changed at $45.81 in New York on Thursday, a sign there’s skepticism that one of the platform’s most outspoken users will succeed in his takeover attempt.
An excerpt of Elon Musk’s letter addressed to twitter’s board:
“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 is the richest person in the world, but how he will find $43 billion in cash has yet to be revealed.
Musk announced the proposed deal in a filing with the U.S. Securities and Exchange Commission on Thursday, after turning down the chance to take a board seat at the company. Musk, who also controls Tesla Inc., first disclosed a stake of about 9% on April 4, making him the largest individual investor. Tesla shares fell about 3% on concern that the attempt to acquire Twitter will be a distraction for Musk.
“This becomes a hostile takeover offer which is going to cost a serious amount of cash,” said Neil Campling, head of TMT research at Mirabaud Equity Research. “He will have to sell a decent piece of Tesla stock to fund it, or a massive loan against it.”
Twitter said that its board would review the proposal and any response would be in the best interests of “all Twitter stockholders.” The board, which was set to meet to evaluate the proposal early Thursday, sees the takeover offer as unwelcome and will probably fight it.
In an interview at a TED conference on Thursday in Vancouver, Musk said he’s not sure he’ll succeed with the acquisition, and indicated that he has a Plan B if Twitter’s board rejects his offer. If he succeeds in his bid, he would seek to retain as many other shareholders as the law allows for a private company, rather than being sole owner.
