The Tesla CEO announced a $41 billion cash offer for Twitter on Thursday, prompting a surge in shares of the social media giant, which Musk says needs to go private to grow and become a free speech platform.
“Twitter has extraordinary potential. I will unlock it,” Musk said in a letter to Twitter’s board on Wednesday, which was made public in a regulatory filing on Thursday.
“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,” Musk wrote. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form.”
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Musk’s offer price of $54.20 per share is 38% higher than Twitter’s April 1 close, the last trading day before Musk made public his more than 9% stake in the social media platform.
In a move analysts said signalled his intention to take over the company, the billionaire recently rejected an offer to join Twitter’s board after disclosing his stake. A board seat would have limited his stake to under 15%.
“Since making my investment I now realize 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.
Musk, who calls himself an absolutist of free speech, has criticized the social media platform and its policies, and recently issued a Twitter poll asking users whether they believe it adheres to the principle of free speech.
“My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,” Musk added.
Goldman Sachs and Wilson Sonsini Goodrich & Rosati will advise Twitter on its offer, according to Reuters.
Shares in Twitter jumped 12% in premarket trading, while those of Tesla fell about 1%. Twitter’s Wednesday closing price of $45.85 implied a 35% chance of accepting Musk’s offer in pre-market trading in New York.
Based on Refinitiv data, the total deal value of $41 billion was calculated using 763.58 million shares outstanding.
Morgan Stanley acted as Musk’s financial adviser for the offer. If the sale proceeds, he did not specify how he would finance it.
“The big question for the Twitter board now is whether to accept a very generous offer for a business that has been a serial underperformer and tends to treat its users with indifference,” Michael Hewson, Chief Market analyst at CMC Markets, said after the announcement of Musk’s offer.
Since joining Twitter in 2009, Musk has amassed more than 80 million followers and has used the platform to make several announcements, including teasing a go-private deal for Tesla that landed him in hot water with regulators.
Former Twitter shareholders have also sued him, alleging that they missed out on the recent run-up in the company’s stock price since he waited too long to divulge his stake.
In recent months, Twitter’s user growth has been slower than expected, even as it pursues big projects such as audio chat rooms and newsletters.
“It would be hard for any other bidders/consortium to emerge and the Twitter board will be forced likely to accept this bid and/or run an active process to sell Twitter,” Wedbush Securities analyst Daniel Ives wrote in a client note.
“There will be the host of questions around financing, regulatory, balancing Musk’s time (Tesla, SpaceX) in the coming days but ultimately based on this filing it is a now or never bid for Twitter to accept,” Ives said.
