Tesla CEO Elon Musk is offering to buy Twitter, a swift turn just days after deciding not to join the social media company’s board of directors.
Twitter Inc. said in a regulatory filing Thursday that Musk provided a letter to the company Wednesday with a proposal to buy the remaining shares. The 50-year-old business mogul, the richest man in the world, already has 9% stock of Twitter, which makes him the biggest shareholder.
In the letter, Musk offered $54.20 per share of Twitter’s stock, which comes out to $41.3 billion, and said that it would be his final offer. Musk’s offer is slightly higher than Twitter’s current market cap value of $36.7 billion.
“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 said in the proposal. “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.”
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Musk revealed over recent weeks that he had been buying shares in almost daily batches starting Jan. 31, prompting Twitter to offer Musk a seat on its board on the condition that he does not own more than 14.9% of the company’s outstanding stock, according to a filing. But Musk backed out of the deal and launched a series of since-deleted tweets about how to better the company – all before this takeover attempt.
Members of the board took issue with his surge to 9% stock and filed a lawsuit Tuesday on behalf of Twitter’s shareholders, arguing that Musk did not file a Schedule 13 with the SEC within the required time and instead continued to amass Twitter shares. “By failing to timely disclose his ownership stake, Musk was able to acquire shares of Twitter less expensively during the Class Period,” the lawsuit says.
The SEC sued Musk after he tweeted in August of 2018 that his funding was secured to make Tesla a private company at $420 a share, but it never materialized, all while Tesla’s stock price spiked. That led to Musk and Tesla paying $40 million in civil fines as well as Musk having his tweets approved by a corporate lawyer.
Twitter has surged more than 12% in premarket trading after the billionaire’s statement. Wedbush Securities analyst Dan Ives wrote in a note to clients Thursday that the power move will lead the Twitter board to “be forced likely to accept this bid and/or run an active process to sell Twitter.”
“There will be 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. “The next step will be Twitter’s Board officially reviewing the Musk filing/letter and then its get out the popcorn time as we expect many twists and turns in the weeks ahead as Twitter and Musk walk down this marriage path.”
The news didn’t come without backlash. Venture capitalist Fred Wilson, who recently invested in Twitter and Etsy, condemned Musk’s move in a tweet.
“Twitter is too important to be owned and controlled by a single person,” he wrote. “The opposite should be happening. Twitter should be decentralized as a protocol that powers an ecosystem of communication products and services.”
Musk is the CEO and founder for Tesla and chief engineer and CEO for SpaceX. He’s listed as the wealthiest person in the world, according to both the Bloomberg Billionaires Index and the Forbes real-time billionaires list.
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Below is the full letter Musk sent to Twitter, according to the SEC filing.
Chairman of the Board,
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.
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.
As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.
Twitter has extraordinary potential. I will unlock it.
Contributing: Terry Collins