(NewsNation) — Elon Musk will acquire Twitter, Inc. for about $44 billion under an agreement the parties reached Monday.
The announcement came amid reports that Musk and Twitter were close to reaching a deal. Twitter will become a privately held company once the transaction is complete.
Under the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, which was the last trading day before Musk disclosed his approximately 9% stake in Twitter, according to a news release the company issued Monday
“The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing,” Twitter’s Independent Board Chair said. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”
Musk said he wants to improve the social media platform by “defeating the spam bots,” authenticating humans and making its algorithms open-source to increase trust
“Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it,” Musk said.
Jack Dorsey, Twitter’s founder, praised the move Monday night.
“In principle, I don’t believe anyone should own or run Twitter,” Dorsey tweeted. “It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”
“I’m so happy Twitter will continue to serve the public conversation. Around the world, and into the stars!” Dorsey said.
Just last week, Twitter officials rejected Musk’s attempt to take over the platform, deploying a “poison pill” stock tactic to keep him clear. However, they later said they were open to his offer.
The Wall Street Journal reported that Twitter board members met on Sunday to discuss the bid, a sign they were ready to negotiate with Musk. It was a marked change from the previous week, when the “poison pill” defense the board executed flooded the market with discounted shares intended to dilute Musk’s power and make a takeover impossible.
“It’s definitely a risky bet for him and I think it’s a head scratcher to many on the street that’ he’s ultimately going after Twitter at a time when social media is really on the other side of this growth curve,” said Daniel Ives, managing director of the investment firm Wedbush Securities.
Sylvan Lane, a financial and economic policy reporter for The Hill, said Musk’s determination to buy Twitter is mission-driven.
“He’s a big user of the platform,” Lane said. “He’s commented on the way it’s been run for years and now he’s going to get a chance to actually change it himself.”
Musk also met privately with Twitter shareholders Friday and vowed to address what he called free speech issues plaguing the platform. Shareholders reached out to the Twitter board members urging them to reconsider the deal.
“Twitter has a purpose and relevance that impacts the entire world, Twitter CEO Parag Agrawal said Monday. “Deeply proud of our teams and inspired by the work that has never been more important.”
The deal is expected to close this year, though it will need regulatory approval. Former investment banker and author Carol Roth said there likely won’t be any antitrust issues, but Musk may not skate by the Securities and Exchange Commission without at least some tough questions.
“The SEC and Elon Musk has a storied history,” Roth said Monday on “NewsNation Prime.” “Funny enough, it’s over a tweet he sent several years ago when he was thinking about taking Tesla private, when he said ‘funding secured.'”
That’s in reference to a 2018 tweet in which Musk claimed to have enough money to take Tesla private at $420 per share. The SEC charged him with securities fraud, though settled with him a year later.
Musk is still fighting that settlement.