Musk is offering $ 43 billion to Twitter to build a “arena for freedom of speech” to Reuters

Musk is offering $ 43 billion to Twitter to build a “arena for freedom of speech” to Reuters

© Reuters. FILE PHOTO: Elon Musk Speaks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan, January 13, 2015. REUTERS / Rebecca Cook / File Photo

(Note: Sharp tongue in paragraphs 1 and 4)

Authors Greg Roumeliotis, Uday Sampath Kumar and Chavi Mehta

(Reuters) – Billionaire entrepreneur Elon Musk has targeted Twitter Inc NYSE 🙂 with a $ 43 billion takeover bid on Thursday, and Tesla CEO (NASDAQ 🙂 said the social media company must be private to grow and become a platform for free speech.

“I think it’s very important that there is an inclusive arena for free speech,” said Musk, who is already the second largest shareholder of San Francisco-based Twitter, at TED Talk in Vancouver when asked about his offer.

Musk made the offer Wednesday in a letter to the Twitter board – a micro-blogging platform that has become a global means of communication for individuals and world leaders – and this was made public in a regulatory submission Thursday. Its offered price of $ 54.20 per share represents a premium of 38% compared to Twitter’s closing on April 1, the last trading day before its 9.1% stake in the social media platform was released to the public.

Musk, the world’s richest man with a fortune of $ 273.6 billion according to Forbes, declined an invitation Saturday to join Twitter’s board after revealing his stake, a move analysts point to his intentions to take over because it would take place in board limited its ownership to just below 15%.

After his speech at TED, Musk hinted at the possibility of a hostile offer in which he would bypass the Twitter board and put the offer directly to his shareholders, tweeting: “It would be completely indefensible not to put this offer to shareholder voting.”

Twitter evaluated the offer with instructions from Goldman Sachs (NYSE 🙂 and Wilson Sonsini Goodrich & Rosati, according to the source. The company was also preparing a poison pill as a protective measure against Musk to increase its stake as early as Friday, the source said.

Shares of Twitter fell 2% in afternoon trading.

Investors were not immediately convinced.

Saudi Arabia’s Prince Alwaleed bin Talal tweeted from his verified deal order. Describing himself as one of Twitter’s “biggest and long-term shareholders,” he said Musk’s offer underestimated the company and he turned it down.

Musk, for his part, said on Twitter that it was his “best and final offer” and said he would reconsider his investment if the board rejects it.

“This is not a way to make money,” Musk said during a TED talk.

“My strong intuitive feeling is that having a public platform that is trusted to the fullest and that is widely involved is extremely important for the future of civilization,” Musk added.

GRAPHICS: Musk makes an offer for Twitter https://fingfx.thomsonreuters.com/gfx/mkt/klpykjxzxpg/Pasted%20image%201649949828970.png

Musk, who called himself an “absolutist of freedom of speech”, was critical of the social media platform and its policies, and recently launched a poll on Twitter asking users if they believe he adheres to the principle of freedom of speech.

After Twitter banned former President Donald Trump over concerns about inciting violence following his supporters’ attack on the US Capitol last year, Musk tweeted, “Many people will be very unhappy with West Coast high technology as a de facto arbiter of free speech.”

In a statement Wednesday – before Musk’s announcement – Trump said he “probably would have no interest” in returning Twitter, where he had more than 88 million followers.

White House spokeswoman Karine Jean-Pierre declined to comment on Musk’s offer on Twitter, saying market regulators act independently of political leadership.

Employees at the company, some of whom were panicked over Musk’s influence on his ability to moderate content, were expected to attend a joint meeting on Twitter later Thursday to discuss the news, a source told Reuters.

Musk said the American Investment Bank Morgan Stanley (NYSE 🙂 was the financial advisor for his offer. He did not say how he would finance the transaction if it was realized, but he told those present at TED that “there are enough funds”, not to mention more.

CFRA Research analyst Angelo Zino said Musk could finance the deal with debt and the sale of Tesla shares.

Musk sold more than $ 15 billion of its Tesla shares last year, about 10 percent of its stake in the electric vehicle maker, to settle the tax liability.

‘SERIAL SUBCONTRACTOR’

The number of users with fewer users than expected in recent months has cast doubt on its growth prospects, even when dealing with major projects such as audio chat rooms and newsletters.

“The big question for the Twitter board now is whether to accept a very generous offer for a job that was serially worse and that tends to treat customers indifferently,” said Michael Hewson, chief market analyst at CMC Markets.

GRAPHICS: The value of Twitter on the stock market https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkdxwkpx/Pasted%20image%201649950835786.png

Twitter will not decide on the fate of Musk’s offer on Thursday, claims a source familiar with the situation. What the board is discussing are the parameters of the evaluation process, and then it will ask its advisors to review the offer and wait for the results, the source said.

Musk has amassed more than 80 million followers since joining Twitter in 2009 and has used it for several announcements. Musk is bound by a 2018 settlement with the U.S. Securities and Exchange Commission that requires him to obtain prior approval for some of his Twitter posts after he tweeted that he has “secured funding” to take Tesla private.

“If he really wants to make Twitter private, his past conflicts with regulators may not be an obstacle – but potential funding sources could be questionable in terms of providing cash for work – unless he is willing to pledge much of his Tesla holding company to debt collateral.” said Howard Fischer, a partner in the Moses & Singer law firm and a former senior court adviser at the SEC.

Musk’s move also raises the question of whether other bidders could show up for Twitter.

“It would be difficult for any other bidder / consortium to appear and the Twitter board is likely to be forced to accept this offer and / or launch an active Twitter sales process,” Wedbush Securities analyst Daniel Ives wrote in a client note.

Asked if there was a “Plan B” if Twitter rejected the offer, Musk told the audience at the TED conference without further explanation: “There is.”



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