Musk makes a $43 billion offer for Twitter to construct a "arena for free speech."

Musk makes a $43 billion offer for Twitter to construct a "arena for free speech." ...

  • Social media company says it is evaluating Musk's offer
  • Musk hints at hostile bid bypassing Twitter's board

Elon Musk, a billionaire, took aim at Twitter Inc with a $43 billion cash buyout offer on Thursday, stating that the social media company must be taken private to help the company flourish and become a platform for libertarian speech.

"I think it's very important for there to be a flexible environment for free speech," Musk, Twitter's second largest shareholder, said during a TED Talk in Vancouver.

Musk submitted a request to Twitter's board on Wednesday, a micro-blogging platform that has evolved into a worldwide communication hub, and it was made public in a regulatory filing. The offer price, which he paid $54.20 per share, represents a 38 percent increase from Twitter's April 1st sale, the last trading day before his 9.1% share in the social media platform was made public.

According to a Forbes fan, Musk, the world's richest person with a $273.6 billion fortune, rejected an invitation to join Twitter's board on Saturday, indicating his takeover intentions, despite a jury's announcement.

Musk presented the possibility of a hostile offer in which he would bypass Twitter's board and transmit the offer directly to its shareholders, tweeting: "It would be absolutely indefensible not to submit this offer to a shareholder vote."

According to a source, Twitter was reviewing the offer with guidance from Goldman Sachs and Wilson Sonsini Goodrich & Rosati. The company was also developing a poison tablet as a precaution against Musk increasing his stake as early as Friday.

On Thursday, Twitter's shares fell by 1.7 percent.

Investors were not satisfied.

Saudi Arabia's Prince Alwaleed bin Talal has tweeted from his verified account about the transaction. Elements recognizing himself as one of Twitter's "largest and long-term shareholders," he said Musk's offer undermined the company and opposed it.

Musk, for his part, informed Twitter that it was his "best and final offer," and said that he would reconsider his investment if the board rejected it.

During Musk's TED Talk, "This isn't a way to sort of make money."

"My strong intuitive belief is that having a public platform that is highly trusted and broadly inclusive, is extremely important to civilization's future," Musk said.

Musk, a self-described "free speech absolutist," has criticised the social media platform and its policies, and recently conducted a survey on Twitter asking users if they believed it respects the principle of free speech. More than 70% of the 2 million votes received said "No."

Following Donald Trump's Twitter departure amid concerns about an incitement of violence in response to the U.S. Capitol attack last year, Musk said: "A lot of people will be very dissatisfied with West Coast High Technology as the de facto henchur."

Trump said on Wednesday, before Musk's announcement, that he "would not have any interest" in returning to Twitter, where he had 88 million followers.

Karine Jean-Pierre, a spokesperson for the White House, has refused to comment on Musk's request for Twitter, claiming that market regulators are in charge of independent politics.

According to a source, Twitter employees, some of whom were concerned about Musk's influence on its ability to moderate content, attended a three-day meeting on Thursday. Chief Executive Officer Parag Agrawal assured them that Musk's offer to purchase the company was not "held hostage."

Morgan Stanley, a US investment bank, was a financial advisor for his offer. He did not reveal how he would finance the transaction if the transaction proceeded, but told the TED talk audience that he "had sufficient assets," without declaring more.

Angelo Zino, a CFRA Research analyst, said Musk might finance the transaction with debt and selling Tesla stock.

Last year, Musk sold more than $15 billion in his Tesla stock, accounted for about 10% of his stake in the electric vehicle manufacturer.

'SERIAL INTERPERFORMER'

Twitter's recent lower-than-expected user additions have raised concerns about its future, even as it pursues large initiatives, such as audio chat rooms and newsletters.

Twitter was founded just two years after Facebook, but it is undermined by the social network. Meta, which owns Facebook, earned $118 billion in revenue in 2021, generating 1.93 billion daily users. Twitter earned $5.08 billion in revenue last year from 217 million daily users.

"The major issue for the Twitter board is whether or not to accept a very generous offer for a business that has been a serial underperformer and tends to treat its users with indifference," said Michael Hewson, chief market analyst at CMC Markets.

According to a source familiar with the situation, Twitter will not decide on Musk's request on Thursday. What the board is discussing is the significance of the valuation process, and it would then ask its advisers to review the proposal and await the results.

Musk has over 80 million followers since joining Twitter in 2009 and has used it to make several announcements. After he admitted that he had "funding secured" to take Tesla private, Musk is bound by a 2018 agreement with the Securities and Exchange Commission.

"If he really wants to take Twitter private his past run-ins with regulators might not pose an obstacle, but it might make potential financing sources leery of paying the cash for the deal, unless he is willing to disclose a substantial portion of his Tesla holdings to collateralize debt," said Howard Fischer, a partner at law firm Moses & Singer and former senior trial counsel at the Securities and Exchange Commission.

Musk's move raises the question whether other candidates might be appointed for Twitter.

"It would be difficult for any other bidders/consortium to emerge, and the Twitter board will be forced to accept this bid and/or run an aggressive process to sell Twitter," said Wedbush Securities analyst Mark Ives in a client note.

At the conference, Musk admitted that success was not assured, but that his intention was to retain as many shareholders as permitted by law in a private corporation.

If Twitter rejected the offer, Musk asked the conference audience whether there was a "Plan B." Without explaining, he said, "There's something."

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