Wednesday, April 17, 2024

Musk makes offer to purchase Twitter

Tesla boss Elon Musk has offered to buy Twitter, saying he is the right person to “unlock” the social media platform’s “extraordinary potential”.

Musk said he would pay $54.20 a share for Twitter, valuing it at about $40 billion, the BBC reports.

It recently emerged that Musk was Twitter’s biggest shareholder after he built up a large stake in the firm.

He said that if his offer is not accepted: “I would need to reconsider my position as a shareholder.”

Twitter’s share price rose by 5.3% to $48.32 in early trading.

A filing with the U.S. financial regulator appeared to show text and/or voice messages from Musk to Twitter’s board, showing that he had raised the idea at the weekend that the business should go private.

Musk had been invited to join the board, but Twitter announced on Sunday he had decided against it. In the messages published in the filing, Musk said he was not “playing the back-and-forth game” and said of his offer: “It’s a high price and your shareholders will love it.”

He said he would have to sell his shares if the deal did not go through.

“This is not a threat, it’s simply not a good investment without the changes that need to be made,” he added.

Victoria Scholar, head of investment at Interactive Investor, said: “This is a deeply hostile move from Elon Musk, who has threatened to ‘reconsider’ his 9.2% stake in the company if his 100% acquisition offer is rejected.”

In his filing with the U.S. Securities and Exchange Commission, Musk said he had invested in Twitter because “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.

“However, 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.”

He added: “Twitter has extraordinary potential. I will unlock it.”

Twitter said its board “will carefully review the proposal to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders.”

Musk is the world’s richest man, according to Forbes magazine, with a net worth of $219 billion mostly due to his shareholding in electric vehicle maker Tesla. He also leads the aerospace firm SpaceX.

Dan Ives, senior equity research analyst at Wedbush Securities, said Twitter will either be forced to accept Musk’s bid or find another buyer.

He said: “There will be a host of questions around financing, regulatory, balancing Musk’s time (Tesla, SpaceX) in the coming days, but based on this filing, it is a now-or-never bid for Twitter to accept.

“Ultimately, we believe this soap opera will end with Musk owning Twitter.”

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