A few weeks ago, Elon Musk offered to buy Twitter in a deal that would see him pay $54.20 per share. The Tesla CEO said that "Twitter has extraordinary potential" and that he was planning to unlock it. However, now he said the deal is on hold.
"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," Musk tweeted on Friday.
If the deal was to go through, Musk, who is the richest man in the world, would pay $44 billion. The SpaceX CEO also noted that the $54.20 price per share was his best and final offer. The news of a possible takeover sent Twitter shares soaring. In pre-market trading, the Twitter stock was up by around 12%. Twitter also confirmed that it had received this proposal from Musk.
The social media company called it an “unsolicited and non-binding proposal” adding that it will carefully review the offer before a final decision is made. The company also noted that it will always do whatever is in the best interest of Twitter shareholders. Musk became Twitter’s largest shareholder when he purchased a 9% stake at the tail end of May.
The Tesla CEO confirmed that he wants to transform the social media service and end its “censorship.” Musk, who has called himself a free speech absolutist, said that since Twitter serves as the “defector public square in modern-day discourse”, there was a need to make it more independent as possible.
After accruing the 9% stake, Musk was offered a seat on the Twitter board but he rejected it after a few days. Analysts note that sitting on the board would have significantly limited Musk's ability to buy the whole company. Also, Twitter has said that even though they welcome Musk’s feedback and input on the future of the company, his 9% stake will not have any effect on the day-to-day running of the social media platform.
Musk has made it clear that the most important goal for him is to transform Twitter into a bastion of free speech. But the richest man in the world is now admitting that at its current state, transforming Twitter into that bastion is not possible. Musk appears to admit that the only way to do this would be to take the company private.
This means the $43 billion offer is not a surprise at all. It will be very interesting to see how this will play out. Naturally, Twitter has a legal obligation to present the bid to the board for a decision to be taken. Some experts argue that, even if Musk's bid to take over the company fails, it has opened the floodgates for more offers to come.
It will not be a surprise if another offer from a bigger consortium comes through in the near term. Besides, the $54.2 a share price will be a huge premium to Twitter's current price. Since Musk announced his 9% stake on Twitter, the company's stock has increased by nearly 50%. Musk could also push for a hostile takeover if the initial bid is rejected by Twitter's board.