Elon Musk will be ‘providing an approximately $21 billion equity commitment’ to buy Twitter. How will Musk arrange the finance? Who will run Twitter once the deal is complete?
Putting an end to weekslong speculation, Twitter board has accepted an offer from Elon Musk, the richest man in the world to buy the popular social media platform for $44 billion cash. The 16-year-old Twitter would become a private entity on completion of the deal, according to the press release. “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” said Elon Musk.
Twitter will be acquired by an entity wholly owned by Elon Musk for $54.20 per share in cash in a transaction valued at approximately $44 billion. The transaction has been unanimously approved by the board of directors of Twitter. The deal is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.
Musk’s takeover of Twitter has emerged as the third largest tech acquisition in history. The Tesla boss last week outlined the $13 billion in bank financing secured by the social-media company and the $12.5 billion backed by a pledge of his Tesla. Musk will be “providing an approximately $21 billion equity commitment,” according to the agreement. There were no further details about where that money would come from. All eyes will be on how is he going to arrange the finance now.
Now the biggest question is who will run the show — the celebrity CEO himself or the current management of Twitter? The acquisition announcement released by the company quoted both chief executive officer Parag Agrawal and chairman Bret Taylor, so they are still in their roles, for now. However, Musk has time and again tweeted his dissatisfaction with the present management of Twitter and how the company has been working. In his proposal to buy Twitter, Musk clearly mentioned, “I am not playing the back-and-forth game. I have moved straight to the end…If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market.” So a change might be on the cards, analysts believe.
As Musk is already tied up with his role as chief executive officer of both Tesla and SpaceX, he is not likely to not take up another hands-on leadership role.
Parag Agrawal, the current CEO of Twitter would get an estimated $42 million if he were terminated within 12 months of a change in control at the social media company, according to a report.
Musk has said openly about his plans to make Twitter an ultimate platform for free speech. Outlining his reasons behind Twitter acquisition, he explained, “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company. As a result, I am offering to buy 100 per cent of Twitter,” he mentioned.”
“I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it,” Musk said, according to the statement released by Twitter.