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Thursday, October 6, 2022

Elon Musk to Buy Twitter Inc (NYSE: TWTR) at $54.20 Per Share in $44 Billion Deal

Twitter Inc (NYSE: TWTR) is selling Twitter.com to the world’s richest person Elon Musk for $44 billion on Monday as first reported by Reuters and soon after reported by many others.  Discussions over the deal, which started with Elon Musk acquiring 9.2% of Twitter purchased on the open market and ended when Musk refused to join Twitters board. Discussions, apparently, after first appearing uncertain, accelerated over the weekend after Musk wooed Twitter shareholders with financing details of his offer. 

According to Reuters, the Company’s decision to engage with Musk, taken earlier on Sunday, did not necessarily mean it would accept his $54.20 a share bid, however it did signify, Twitter was exploring whether a sale to Musk was possible on attractive terms. Reuters added that Twitter also had concerns about deploying a poison pill stance if big shareholders back the bid. Currently Vanguard, a US asset management firm, is the largest shareholder with more than 10%. Since topping $80 per share on February 25, 2021, TWTR lost well over half its value hitting lows of $31.30 a year later on February 24, 2022. Since than the stock has been rising steadily first on Elon Musks open market purchases of 73.5 million shares worth $2.9 billion, then there was the filing with the Securities and Exchange Commission, in which Musk said he has received commitments for $46.5 billion in financing. Morgan Stanley, which is Twitter’s third-largest shareholder, led the funding commitments. Finally, TWTER moved over $50 before being halted on April 25, 2022 after Reuters reported that Elon Musk clinched a deal to buy Twitter Inc (TWTR.N) for $44 billion at the proposed $54.20 per share price. 

Twitter Inc (NYSE: TWTR) is a global platform for public self-expression and conversation in real time. According to the Company’s recent 10k “We have democratized content creation and distribution so people can consume, create, distribute and discover content about the topics and events they care about most. Through Topics, Interests, and Trends, we help people discover what’s happening through text, images, on demand and live video, and audio from people, content partners, media organizations, advertisers and others. Media outlets, websites, and other partners extend the reach of Twitter content by distributing Tweets beyond our app and website.” 

As of the second quarter of 2021, Twitter had 206 million monetizable daily active users worldwide. The most-followed Twitter accounts include celebrities such as Katy Perry, Justin Bieber and former U.S. president Barack Obama. In the US Twitter has 79 million users followed by Japan with 9 million users. 

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Twitter went public on the NYSE back in November 2013 pricing its initial public offering at $26 a share. The stock debuted at 10:49 a.m. on November 7, 2013 and quickly jumped to a high of $50.09 — a gain of 93% over the IPO price — before dropping back a bit to close the trading day at $44.90. Twitter raised about $1.8 billion through the sale of 70 million shares on its IPO a disappointment compared to the $16 billion Facebook raised on its IPO. Twitter has come a long way since losing money in its early days; In 2021, Twitter generated more than 4.5 billion U.S. dollars in advertising service revenues, up from 3.2 billion U.S. dollars in the previous year. Additionally, the micro-blogging platform produced around 571 million U.S. dollars in data licensing revenue, up from 508 million U.S. dollars in 2020. 

Already there is speculation that Musk may move the company’s headquarters from San Francisco to Austin, Texas. With Twitter owned by Musk, industry analysts and Austin-area tech officials say it’s not a stretch to think that he might move the company’s headquarters from San Francisco to the lone star state. Last year Musk announced he was moving Tesla’s corporate headquarters from California to Travis County, on the site of the automaker’s $1.1 billion manufacturing plant, which recently began production. Musk also moved the headquarters of his tunneling and infrastructure company, the Boring Company, to Central Texas. 

Elon Musk is an entrepreneur, investor, and business magnate. He is the founder, CEO, and Chief Engineer at SpaceX; He is also the owner of Twitter; early-stage investor, CEO, and Product Architect of Tesla, Inc.; founder of The Boring Company; and co-founder of Neuralink and OpenAI. With an estimated net worth of around US$273 billion as of April 2022, Musk is the wealthiest person in the world according to both the Bloomberg Billionaires Index and the Forbes real-time billionaires list. 

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Elon Musk has shocked the word with his controversial acquisition of Twitter which will now go private at $54.20 per share. Between February 25, 2021, and February 24, 2022 Twitter lost well over half its value hitting lows of $31.30 per share. The platform had faced criticism for its DE platforming (banning) of many prominent accounts, some with millions of followers. Elon Musk has long advocated for a different kind of twitter tweeting a pole on March 25 stating: “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?” according to the poll, 70.4% of respondents answered no. It remains to be seen what changes Mr. Musk will make at twitter now that he owns it all; Number 45 has already come out and said he will not be rejoining twitter even if Elon Musk asks him too. In any case, the next few weeks should be very interesting for twitter and now that Elon Musk owns it, we wish Twitter and Mr. Musk the best of luck.  We will be updating on Twitter when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with Twitter .

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Disclosure: we hold no position in TWTR either long or short and we have not been compensated for this article.

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