Deal: Twitter Accepts Elon Musk’s $44B Buyout Offer

Elon Musk

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.

 

  • Twitter represents the biggest acquisition in the technology industry this year. This year, the sector has witnessed other noteworthy massive acquisitions, such as Thoma Bravo‘s purchase of cloud software firm Anaplan ($11bn) and cybersecurity company SailPoint ($7bn).

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