NEW YORK (Reuters) – Elon Musk struck a deal to buy Twitter Inc (TWTR.N) for $44 billion in cash on Monday in a deal that will shift control of the social media platform of millions of users and global leaders into the world’s richest person.
It’s a defining moment for the 16-year-old company, which has emerged as one of the world’s most influential public arenas and now faces a series of challenges.
Musk, who calls himself an absolute freedom-of-speech, criticized Twitter’s moderation. He wants the Twitter algorithm to prioritize tweets to be public and objects to giving too much power over the service to companies that advertise.
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Political activists predict that the Musk regime will mean less moderation and the reinstatement of banned individuals, including former President Donald Trump. Conservatives have cheered at the prospect of less controls while some human rights activists have expressed concerns about an uptick in hate speech. Read more
Musk also called for easy-to-use tweaks to the service, such as the edit button, and to defeat “spam bots” that send out massive amounts of unwanted tweets.
Discussions about the deal, which last week seemed uncertain, accelerated over the weekend after Musk wooed Twitter shareholders with details of financing his bid.
Under pressure, Twitter began negotiating with Musk to buy the company at its suggested price of $54.20 per share. Read more
“Freedom of expression is the bedrock of a functioning democracy, and Twitter is the digital city arena where matters vital to humanity’s future are discussed,” Musk said in a statement.
Former Twitter CEO Jack Dorsey threw his weight on the deal late Monday with a series of tweets thanking both Musk and current Twitter CEO Parag Agrawal for “getting the company out of an impossible situation.”
“Twitter as a company has always been my only problem and my biggest regret. It was owned by Wall Street and the advertising model. Getting it back from Wall Street is the right first step,” he said.
Twitter shares rose 5.7% Monday to close at $51.70. The deal represented a premium of nearly 40% over the closing price the day before Musk disclosed that he had bought more than 9% of the shares.
However, the offer is well below the $70 range where Twitter traded last year.
“I think if we had given the company enough time to transform, we would have achieved more than what Musk is currently offering,” said Jonathan Boyar, managing director of Boyar Value Group, which owns a stake in Twitter.
However, he added, “If the public markets don’t value a company properly, the acquirer will eventually do so.”
Musk’s move continues the tradition of billionaires’ control of buying influential media platforms, including Jeff Bezos’s 2013 acquisition of The Washington Post.
Twitter said Musk had secured $25.5 billion in debt and margin loan financing, and made a commitment of $21 billion.
Musk, who has a net worth of $268 billion according to Forbes, said he is not primarily interested in Twitter’s economics.
In a recent public address, he said, “Having a public platform that is highly trusted and broadly inclusive is critical to the future of civilization. I don’t care about economics at all.”
Musk is the CEO of both electric car maker Tesla Inc (TSLA.O) and SpaceX, and it’s not clear how much time he will dedicate to Twitter or what he will do.
“Once the deal is completed, we don’t know which direction the platform will go,” Agrawal told employees on Monday. Read more
Edward Moya, an analyst at cryptocurrency brokerage OANDA, said in an email to clients that the deal was “great news for Twitter shareholders as the company doesn’t look like it’s going to get things right any time soon.”
But he also said: “Tesla shareholders cannot be happy that Musk will have to shift more attention away from winning the EV (electric car) race.”
However, Musk’s Twitter account of 84 million people is seen as an important and free PR and marketing tool for Tesla.
Twitter’s transaction has been approved by the company’s board of directors and is now subject to a shareholder vote. Analysts said he did not expect regulatory hurdles.
Wedbush analyst Daniel Ives said the company’s board of directors was behind him “up against the wall” once Musk detailed his financing package and no further bid appeared.
Although no more than a tenth the size of larger social media platforms such as Facebook’s Meta Platforms Inc (FB.O), Twitter is credited with aiding the emergence of the Arab Spring uprising and accused of playing a role in the January 6, 2021, storming of the Capitol Building American.
After Twitter banned Trump over concerns about inciting violence in the wake of the US Capitol attack by his supporters, Musk tweeted: “A lot of people would be very unhappy with West Coast high-tech as the de facto arbiter of free speech.”
Trump, whose company is building a Twitter competitor called Truth Social, said in an interview with Fox News Monday that he will not be returning to Twitter.
The White House on Monday declined to comment on Musk’s deal, but said President Joe Biden has long worried about the power of social media platforms.
“Our concerns are not new,” White House spokeswoman Jen Psaki said, adding that the platforms must be held accountable. “The President has long spoken of his concerns about the power of social media platforms, including Twitter and others, to spread misinformation.”
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(Greg Romelutis reports) from New York. Additional reporting by Kristal Hu, Louis Krauskoff and Megan Davis in New York, Noel Randywich in San Francisco, Sheila Dang in Dallas, Andrea Shalal and Trevor Honeycutt in Washington and Shivam Patel in Bengaluru; Written by Peter Henderson. Editing by Anna Driver, Kenneth Lee, Matthew Lewis and Edwina Gibbs
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