# Elon Musk targets Twitter with $41 billion cash takeover offer
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-14
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Elon Musk Offers $41B for Twitter in Push for Free Speech
Meta Description: Tesla CEO aims to transform Twitter into a platform for free speech, with a $54.20 per share offer, showing a 38% premium. Is Twitter ready for this shift?
URL: https://financedigest.com/elon-musk-targets-twitter-with-41-billion-cash-takeover-offerhtml

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By Uday Sampath Kumar and Chavi Mehta

(Reuters) – Elon Musk took aim at Twitter with a $41 billion cash offer on Thursday, with the Tesla CEO and billionaire entrepreneur saying the social media giant needs to be taken private to grow and become a platform for free speech.

“Twitter has extraordinary potential. I will unlock it,” Musk, who is already the company’s second-largest shareholder, said in a letter to [Twitter’s board](https://www.financedigest.com/elon-musk-drops-plans-to-join-twitter-board-deletes-weekend-tweets.html "Elon Musk drops plans to join Twitter board, deletes weekend tweets") on Wednesday. The [offer was made public in a regulatory](https://www.financedigest.com/a-psd2-the-real-regulatory-impact-on-marketplaces-offering-payment-services.html "a PSD2: the real regulatory impact on marketplaces offering payment services") filing on Thursday.

Musk’s offer price of $54.20 per [share represents a 38% premium to Twitter’s April](https://www.financedigest.com/abb-to-launch-1-billion-share-buyback-on-april-3.html "ABB to launch billion share buyback on April 3") 1 close, the last trading day before his 9.1% stake in the social media platform was made public.

Musk rejected an invitation to join Twitter’s [board this week after disclosing his stake, a move which analysts said signaled his takeover intentions as a board seat would have limited his shareholding](https://www.financedigest.com/hsbc-board-recommends-shareholders-vote-against-spin-off-resolution.html "HSBC board recommends shareholders vote against spin-off resolution") to just under 15%.

He told Twitter it was his best and final [offer and said he would reconsider his investment if the board rejects](https://www.financedigest.com/copper-miner-teck-resources-rejects-glencores-22-5-billion-offer.html "Copper miner Teck Resources rejects Glencore’s .5 billion offer") it.

Since making my investment I now realize the [company will neither thrive nor serve this societal imperative in its current form](https://www.financedigest.com/microsoft-videogame-testers-form-companys-first-u-s-union.html "Microsoft videogame testers form company’s first U.S. union"). Twitter needs to be transformed as a private company,” [Musk](https://www.financedigest.com/elon-musk-plans-to-cut-half-of-twitter-jobs-bloomberg-news.html "Elon Musk plans to cut half of Twitter jobs – Bloomberg News") said in his letter to Twitter Chairman Bret Taylor.

Musk, who calls himself a free-speech absolutist, has been critical of the [social media](https://www.financedigest.com/saudi-snitching-app-turns-citizens-into-social-media-police.html "Saudi snitching app turns citizens into social media police") platform and its policies, and recently ran a poll on Twitter asking users if they believed it adheres to the principle of free speech.

[Twitter will review the offer](https://www.financedigest.com/twitter-shares-cruise-towards-musks-offer-price-as-deal-deadline-looms.html "Twitter shares cruise towards Musk’s offer price as deal deadline looms") with advice from Goldman Sachs and Wilson Sonsini Goodrich & Rosati, a source told Reuters.

Shares in Twitter rose about 5% in pre-market trading to $48.30 in New York, where they were the most actively traded, while [Tesla stock](https://www.financedigest.com/rivian-stock-less-bruised-than-tesla-as-both-miss-ev-targets.html "Rivian stock less bruised than Tesla as both miss EV targets") fell by about 2%. Based on its Wednesday closing price of $45.85, Twitter’s [share price](https://www.financedigest.com/netflix-cuts-prices-in-some-countries-to-boost-subscriptions-shares-drop.html "Netflix cuts prices in some countries to boost subscriptions, shares drop") reaction implied a 29% chance of Musk clinching a deal.

The total deal value of $41 [billion was calculated based on 763.58 million shares](https://www.financedigest.com/novartis-launches-new-11-billion-share-buyback.html "Novartis launches new billion share buyback") outstanding, according to Refinitiv data.

Musk said U.S. investment [bank Morgan Stanley was acting as financial adviser for his offer](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse billion lifeline offers limited respite to global banks"). However, he did not say how he would finance the transaction if it goes ahead.

We think [Musk could look to fund](https://www.financedigest.com/with-big-bets-on-musk-these-funds-may-have-a-tesla-problem-in-23.html "With big bets on Musk, these funds may have a Tesla problem in ’23") the transaction, if approved, through a combination of debt financing and potentially Tesla shares. Given the size of the transaction (about $43B), we think it is conceivable that some Tesla [shares could be sold given much of his wealth](https://www.financedigest.com/permitted-share-of-chinas-yuan-in-russian-wealth-fund-doubled-to-60-finance-minister.html "Permitted share of China’s yuan in Russian wealth fund doubled to 60% -Finance Minister") is tied to the company,” CFRA Research analyst Angelo Zino said.

Musk, the richest person in the world according to a tally by Forbes, sold more than $15 billion worth of his Tesla shares, about 10% of his stake in the [electric vehicle maker](https://www.financedigest.com/lack-of-electric-vans-opens-door-for-chinese-other-ev-makers.html "Lack of electric vans opens door for Chinese, other EV makers"), late last year to settle a tax obligation.

‘SERIAL UNDERPERFORMER’

Twitter’s lower-than-expected user additions in recent [months have raised](https://www.financedigest.com/italys-leonardo-raises-fy-orders-guidance-after-strong-nine-months.html "Italy’s Leonardo raises FY orders guidance after strong nine months") doubts about its growth prospects, even as it pursues big projects such as audio chat rooms and newsletters.

The big question for the Twitter board now is whether to [accept a very generous offer](https://www.financedigest.com/germanys-slm-recommends-shareholders-accept-nikon-takeover-offer.html "Germany’s SLM recommends shareholders accept Nikon takeover offer") for a business that has been a serial underperformer and tends to treat its users with indifference,” Michael Hewson, Chief Market analyst at CMC Markets, said after the announcement of Musk’s offer.

Musk has amassed more than 80 [million followers](https://www.financedigest.com/10-million-to-be-whipped-into-ice-cream-brand-four-winters-following-acquisition.html " Million To Be Whipped Into Ice Cream Brand Four Winters Following Acquisition ") since joining Twitter in 2009 and has used it to make several announcements, including teasing a go-private deal for Tesla that landed him in hot water with regulators.

He has also been sued by former Twitter [shareholders who claim they missed out on the recent run-up in its stock price because he waited too long to disclose his stake](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount").

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 providing the cash for the [deal – unless he is willing to pledge a large portion of his Tesla holdings to collateralize the debt,”](https://www.financedigest.com/analysis-no-china-no-deal-bid-to-break-sovereign-debt-logjams-gets-weary-thumbs-up.html "Analysis-No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up") Howard Fischer, a partner at law firm Moses & Singer and former senior trial counsel at the U.S. [Securities and Exchange](https://www.financedigest.com/vaultbank-exchange-launches-in-beta-opening-security-tokens-for-trading.html "Vaultbank Exchange Launches in Beta, Opening Security Tokens for Trading") Commission (SEC).

Musk’s move also [raises the question of whether](https://www.financedigest.com/graphic-chip-price-drop-raises-questions-on-whether-end-of-shortage-is-in-sight.html "Graphic chip price drop raises questions on whether end of shortage is in sight") other bidders might emerge for Twitter, although the initial share price reaction did not suggest this was widely expected.

It would be hard for any other bidders/consortium to emerge and the Twitter [board will be forced likely to accept this bid and/or run an active process](https://www.financedigest.com/board-report-highlights-complex-decision-making-process-across-banking-and-finance-sector.html "Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector") to sell Twitter,” Wedbush Securities analyst Daniel Ives wrote in a client note.

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](https://www.financedigest.com/musk-secures-46-5-billion-in-funding-for-twitter-bid.html "Musk secures .5 billion in funding for Twitter bid") to accept,” Ives said.

(Reporting by Chavi Mehta and Uday Sampath in Bengaluru; Greg Romeliotis in New York and Chris Prentice in Washington, D.C.; Writing by Anna Driver; Editing by Anil D’Silva and Alexander Smith)


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