Elon Musk, the Tesla CEO, launched a $43 billion cash buyout bid for Twitter Inc on Thursday, claiming that the social media behemoth needs to be taken private in order to flourish and become a platform for free expression.
‘Twitter has extraordinary potential. I will unlock it’, Musk, who is already the company’s second-largest shareholder, wrote to the board on Wednesday. The offer was made public in a regulatory filing on the next day.
Musk’s bid price of $54.20 per share represents a 38% premium to Twitter’s April 1 close, the last trading day before his 9.1% ownership in the social media network was made public. According to Forbes, he turned down an invitation to join Twitter’s board of directors this week after reporting his investment, a move experts claimed indicated his takeover plans because a board position would have capped his stock to just under 15%.
Also Read: Alia Bhatt and Ranbir Kapoor get married, actress shares first post after wedding
Musk claimed on Twitter that it was his best and last offer and if the board rejected it, he would reevaluate his investment. ‘Since making my investment I now realise the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company’, Musk said in his letter to Twitter Chairman Bret Taylor.
According to Reuters, Twitter will evaluate the offer with help from Goldman Sachs and Wilson Sonsini Goodrich & Rosati. Twitter’s stock increased 1.8% to $46.70 in mid-morning trade. The reaction of Twitter’s stock price suggested that Musk had a 10% probability of securing a contract.
Musk stated that Morgan Stanley, a US investment firm, was acting as his financial consultant for his offer. He did not say how he would finance the transaction if it goes ahead.
‘We think Musk could look to fund the transaction, if approved, through a combination of debt financing and potentially Tesla shares. Given the size of the transaction (about $43B), we think it is conceivable that some Tesla shares could be sold given much of his wealth is tied to the company’, CFRA Research analyst Angelo Zino said.
Post Your Comments