US-based social media platform Twitter, Inc. announced on Monday that it has entered into a definitive agreement to be acquired by an entity wholly owned by billionaire entrepreneur 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 percent premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Musk disclosed his approximately 9 percent stake in Twitter, the company said in a statement.

“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 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.”

Elon Musk’s tweet

“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,” Twitter’s Independent Board Chair Bret Taylor 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,” Twitter’s CEO Parag Agrawal said.

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.

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.

The development of Musk’s proposed acquisition of Twitter has been closely followed globally. Last week, Reuters reported that Musk took a swipe at the board of Twitter after the social media company adopted a “poison pill” to protect itself from the second-biggest shareholder’s cash buyout offer.

“Board salary will be $0 if my bid succeeds, so that’s ~$3M/year saved right there,” Musk tweeted in response to a user’s post criticizing the board.

Twitter earlier adopted a limited duration shareholder rights plan, often called a “poison pill,” a day after Musk offered to buy the company for $43 billion, the company announced on Apr 15, CNBC reported.

Under the new structure, if any person or group acquires beneficial ownership of at least 15 percent of Twitter’s outstanding common stock without the board’s approval, other shareholders will be allowed to purchase additional shares at a discount. The plan is set to expire on April 14, 2023. Such a move is a common way to fend off a potential hostile takeover by diluting the stake of the entity eying the takeover, according to the report.

Musk, who is an active Twitter user himself, emerged at the beginning of April as the largest shareholder of Twitter with a 9.2 percent stake. He was then offered to join Twitter’s board but turned down the invitation before launching a surprise bid for the company on Apr 14.

Musk, who co-founded and leads Tesla, SpaceX, Neuralink, and The Boring Company, has 84.3 million followers on Twitter. His tunneling startup Boring Co. has raised $675 million in a funding round led by Vy Capital and Sequoia Capital last week. The round values the startup at $5.675 billion.

Twitter has more than 217 million active daily users globally. According to Statista Research Department, Twitter is particularly popular in the US, where, as of January 2022, the microblogging service had an audience reach of 76.9 million users. Japan and India were ranked second and third with more than 58 and 23.6 million users respectively.
In Southeast Asia, Indonesia has approximately 18.45 million users on Twitter, according to Statista.

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