Twitter Accepts Elon Musk’s $43B Purchase Offer

Reuters reported this morning that Twitter’s board may announce its acceptance of Elon Musk’s offer to buy Twitter for $54.20 per share.

The news agency cited “people familiar with the matter” in its coverage and notes that these sources said the deal could always fall apart at the last minute.

The New York Times reported that Twitter’s board met with Musk Sunday and that discussions continued into the wee hours of this morning.

Musk acquired 9.1% of Twitter on April 4, making him the company’s largest shareholder.

Twitter announced that Musk would join its board of directors; However, Tesla’s CEO announced on April 9 via Twitter that he declined the offer.

Had he accepted the board seat, Musk’s stake in Twitter would have been limited to no more than 14.9% for the duration of his tenure, plus 90 days.

Can Musk really buy Twitter?

In short, yes.

But it will take some creative funding.

And while most acquisitions are funded largely by securing debt against the target company’s assets, Musk is said to have other plans.

Musk reportedly plans to fund two-thirds of the $46.5 billion funding package with his own assets.

Citing again sources familiar with the matter, Reuters reported that the banks involved did not see enough cash flows on Twitter to justify securing more debt against them.

Musk’s portion of the financing includes a $12.5 billion margin loan secured against his Tesla stock.

The regulatory filing states that if Tesla stock drops 40%, the loan payment is due.

Musk called the takeover on Twitter “extremely important to the future of civilization” and in fact, these numbers seem to indicate that potential profit is not his primary driver.

Whether or not Musk-led Twitter holds the keys to civilization is debatable.

It will almost certainly change the platform for digital marketers.

A more open, less moderate Twitter could spell greater risk for brands trying to navigate the channel for two-way customer communications and advertising.

However, Musk’s experience with online payments could prove to be a valuable asset for Twitter, particularly for its social commerce strategy.

Updated April 25, 2022, 4:15 PM ET

Twitter confirmed in a press release Distributed this afternoon approved the acquisition.

Elon Musk will wholly own the entity acquiring Twitter for $54.20 per share paid out in cash.

The purchase price represents a 38% premium to the share price as of April 1, 2022, the last day before Musk’s purchase of 9.1% of Twitter shares, according to the release notes.

The transaction is expected to close in 2022 and has been unanimously approved by Twitter’s board of directors.

Resources:
Twitter is preparing to accept Musk’s original offer of $43 billionAnd the Reuters
Analysis: Musk rips the rules of the $46.5 billion Twitter-funded takeoverAnd the Reuters
Twitter is close to a deal to sell itself to Elon MuskNew York times
Featured image: Shutterstock/Caspars Greenwald