Billionaire Elon Musk has offered to buy Twitter for $41.39bn, saying his proposed takeover is needed to uphold free speech.
The Tesla chief executive offered to pay $54.20 a share a little more than a week after his 9.2% stake in the company was publicly announced.
“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,” he said in a letter to Twitter chairman Bret Taylor.
Read more: Elon Musk’s swoop on Twitter likely to succeed but its employees will be nervous
Twitter Due to your consent preferences, you’re not able to view this. Open Privacy Options“Since making my investment I now realise the company will neither thrive nor serve this societal imperative in its current form.
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‘This is not a threat’
More on Elon Musk Related Topics: Elon MuskTwitterMusk pointed out that his offer was 38% higher than the price of Twitter’s stock the day before it was revealed that he had become the company’s largest shareholder.
“My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,” he added.
He said “this is not a threat, it’s simply not a good investment without the changes that need to be made”.
He said he does not have “confidence in management” and does not believe he can “drive the necessary change” while the company is still public.
Following the announcement, Twitter shares jumped as much as 12% in pre-market dealing but the gains proved more tentative after the open on Wall Street – trading just 2% higher at $47 a share ahead of a meeting of Twitter’s board.
Twitter confirmed it received the “unsolicited” proposal and said its board would “carefully review” it to “determine the course of action” that it believes is in the best interest of the company and its shareholders.
It comes just days after the billionaire rejected a seat on the social media company’s board, which would have stopped him from taking over the company.
Analysis by Ian King, business presenterThere has to be a strong chance that Mr Musk will succeed in winning control.
Not only is he offering a significant premium to Twitter’s share price before he began investing, there is not a competitive bidding situation here, with no other would-be buyers on the horizon.
Moreover, with his “take-it-or-leave-it” approach, Mr Musk has Twitter, in the jargon, in a ‘bear hug’. Twitter’s board know that, if he walks away, the share price will tank.
And many investors will snatch at an attractive offer.
The question is, if Mr Musk succeeds, what changes those would involve.
He has mused in the recent past, for example, about issuing an authentication ‘check mark’ for premium subscribers.
He may also look to move from an advertising-based model to make Twitter a business funded by subscriptions.
Another question is whether Mr Musk plans to try and buy Twitter outright.
With an estimated net worth of $265bn he can afford to, in theory, except a lot of that wealth is tied up in Tesla shares.
So it may well be that he will borrow against those shares, using them as security, although alternatively he could seek the backing of a private equity company.
The big question most Twitter users will have is whether the platform will change in character following a takeover.
Twitter’s management – both Mr Agrawal and before that the company’s co-founder Jack Dorsey – have tried hard, not always successfully, to make Twitter a platform where the discourse is reasonably civil.
That has included using moderation policies that a lot of people, presumably including Mr Musk himself, regard as too heavy-handed.
So some will fear a takeover might result in more trolling and, perhaps, a lifting of the ban on former US president Donald Trump.
All these are questions to which an answer will not immediately be available.
And that lack of clarity will leave many users – and especially Twitter employees – rather nervous.
Musk, a frequent Twitter user with more than 80m followers, has previously criticised the platform’s approach to free speech.
Neil Campling, from Mirabaud Equity Research, called his proposal a “hostile takeover” which is going to cost “a serious amount of cash”, adding that Musk may have to sell Tesla stock to fund it – or take out a massive loan.
Musk is currently worth about $265bn, according to Forbes.