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Tuesday August 16th

Elon Musk Reaches Deal to Buy Twitter for More Than $40 Billion

<p>The social network agreed to Musk’s offer of $54.20 per share, according to the <a href="https://www.nytimes.com/live/2022/04/25/business/elon-musk-twitter/musks-deal-for-twitter-is-worth-about-44-billion?smid=url-copy" target="">New York Times</a>. The deal comes after Musk had announced on April 4 that he had purchased a 9.2% stake in the company, becoming its largest shareholder(Image created by Lauren Schweighardt/Graphic Designer).</p>

The social network agreed to Musk’s offer of $54.20 per share, according to the New York Times. The deal comes after Musk had announced on April 4 that he had purchased a 9.2% stake in the company, becoming its largest shareholder(Image created by Lauren Schweighardt/Graphic Designer).

By Matthew Kaufman

Staff Writer

Twitter agreed to be sold to Elon Musk for $44 billion, following weeks of back-and-forth between the company and the billionaire.

The social network agreed to Musk’s offer of $54.20 per share, according to the New York Times. The deal comes after Musk had announced on April 4 that he had purchased a 9.2% stake in the company, becoming its largest shareholder.

Twitter had originally offered Musk a seat on the board, but he turned it down, saying that the position would not allow him to bring the changes he thought were necessary.

Musk then said that his desire was to buy out the entire company and take it private, so that its stocks would no longer be publicly traded, writing in an SEC filing that he believes “in [Twitter’s] potential to be the platform for free speech around the globe.”

“However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form.” Musk wrote in the filing. “Twitter needs to be transformed as a private company.”

When Musk first offered to buy out the company, Twitter announced that it would be instituting a “poison pill” to defend against the hostile takeover. According to AP, this would mean that once a shareholder, Musk, acquires 15% of the company’s stock, the market would be flooded with new shares that other shareholders could buy at a discount. The increased number of shares would make it harder for Musk to reach the threshold necessary to own the company.

The method did “not mean that the company is going to be independent forever,” Drew Pascarella, a senior lecturer of finance at Cornell University, told the Times. “It just means that they can effectively fend off Elon” or buy more time to negotiate.

In response to the idea of Twitter using a poison pill, Musk signaled that he would be willing to fight to gain control of the company.

“If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty,” he tweeted on April 14. “The liability they would thereby assume would be titanic in scale.

But when the Tesla CEO released in detail how he planned to pay for the offer, Twitter began to seriously consider selling, according to the Wall Street Journal. Though Musk is worth more $270 billion, the vast majority of that wealth comes from his Tesla stock. Rather than selling off his stock, Musk would take out a loan and use the stock as collateral. While $21 billion of the offer will come from his personal wealth, according to the WSJ, the rest will come from loans from various investment banks.

Some market analysts have wondered why Musk would want to risk his Tesla shares in exchange for ownership of Twitter, according to the Washington Post, as Twitter is not consistently profitable while Tesla continues to grow.

“You’re giving away caviar to buy a hot dog on the street in New York City,” said Wedbush Securities analyst Dan Ives.




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