Twitter has accepted an offer from billionaire Elon Musk to buy the social media company and take it private, the company announced Monday.
The announcement ends a weeks-long saga Musk kicked off when he disclosed a large stake in the company. Soon after, the company said he would join the board, only for Musk to reverse course on that plan several days later. Then, he offered to buy the company at $54.20 per share, his “best and final.” That offer valued Twitter at about $43 billion.
Twitter shares rose 5% Monday amid reports the company will soon accept Elon Musk’s takeover offer, a dramatic shift after the board originally organized a “poison pill” or shareholder rights agreement, that would allow other shareholders to buy the stock at a discount should Musk or another person or group acquire more than 15% of outstanding common stock. The plan would dilute that person’s holdings in a strategy commonly employed to prevent unwanted acquisitions.
About 20 minutes into trading, Twitter shares were up 3.6 per cent amid an otherwise downbeat day in New York, where the Dow, Nasdaq and S&P 500 were all in the red by under one per cent.
Musk had launched his $43 billion hostile takeover bid for the company earlier this month, casting it as a promotion of freedom of speech.
Initially, the social media company board expressed doubt on how Musk would fund the deal. despite being the world’s richest person, much of his wealth is tied up in Tesla stock, meaning he would likely have to borrow against his holdings to fund the deal.
However, the offer became more concrete once Musk announced in a Securities and Exchange Commission filing that he received commitments for $46.5 billion to help finance the potential deal. That included about $25.5 billion in debt financing from Morgan Stanley Senior Funding and other firms. He said he committed about $21 billion in equity financing.
Musk said in the same filing he was exploring a tender offer to purchase shares of Twitter directly from shareholders.
Musk’s interest in Twitter comes from his own frequent use of the platform. The Tesla and SpaceX CEO often uses his large platform to share jokes, engage with followers and make business announcements.