- M&A
- April 25, 2022
- 5 minutes read
Deal: Twitter Accepts Elon Musk’s $44B Buyout Offer
Behold, the biggest tech deal of 2022. Twitter (NYSE: TWTR), the social media giant, has agreed to be acquired by…
Behold, the biggest tech deal of 2022. Twitter (NYSE: TWTR), the social media giant, has agreed to be acquired by Elon Musk following a short period of deliberations. Musk, the CEO of electric carmaker Tesla and aerospace company SpaceX, will pay $54.20 per share to take Twitter private, valuing it at $44bn, including his 9% stake.
The purchase price represents a 38% premium to Twitter’s closing stock price on the 1st of April, 2022, when Musk disclosed his 9% shareholding preceding his bid to buy the whole company.
Timeline
- According to SEC filings, Musk began buying Twitter shares in January and surpassed the 5% limit requiring disclosure (according to SEC rules) on March 14. Musk missed the deadline for reporting to the SEC by ten days and initially filed a report stating he was a “passive investor” before updating it to indicate his status as an active investor.
- Musk’s filing delay triggered a lawsuit from an individual Twitter shareholder accusing him of accumulating Twitter shares for significantly lower than he would have if he had disclosed early.
- On April 4, Twitter offered Musk a board seat, with a caveat that he would not acquire more than 15% of the company’s shares. A day later, Musk refiled his SEC disclosure to indicate his status as an active investor. On April 9, Musk rejected Twitter’s board seat offer.
- On April 13, Musk made a formal offer to buy Twitter for $54.20 per share. Twitter’s board swiftly reacted with a “poison pill,” giving shareholders the chance to buy shares at a discount to dilute Musk’s stake. This plan was unsuccessful, as Twitter has now accepted Musk’s buyout offer.
According to an SEC filing, Musk has set aside $21bn of his own money “equity” and $25.5bn in debt financing to fund the Twitter deal. A group of financial institutions led by Morgan Stanley committed $12.5bn in margin loans collateralized by Elon Musk’s Tesla shares and $13bn secured against Twitter.
Tesla executives are allowed to secure loans of no more than 25% of the value of their pledged stock. Musk’s latest margin loan has significantly increased the value of his Tesla shares tied to such loans. He has already borrowed against $88bn worth of Tesla stock, and the acquisition financing will push that figure to around $150bn.
