NEW YORK, April 25 (Reuters) – Elon Musk has reached an agreement to buy Twitter Inc (TWTR.N) for $44 billion in cash on Monday in a deal that will transfer control of the platform from social media populated by millions of users and from world leaders to the richest person in the world.
It’s a watershed moment for the 16-year-old company, which has established itself as one of the most influential public squares in the world and now faces a series of challenges.
Musk, who calls himself a free speech absolutist, criticized Twitter’s moderation. He wants Twitter’s algorithm for prioritizing tweets to be public and opposes giving too much power over the service to companies that advertise.
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Political activists expect a Musk regime to mean less moderation and reinstatement of banned people, including former President Donald Trump. read more Tories have cheered the prospect of fewer checks while some human rights campaigners have expressed fears of an increase in hate speech. Read more
Musk also advocated user-friendly tweaks to the service, such as an edit button and defeating “spam bots” that send overwhelming amounts of unwanted tweets.
Discussions of the deal, which seemed uncertain last week, accelerated over the weekend after Musk courted Twitter shareholders with details of his bid’s funding.
Under pressure, Twitter began negotiating with Musk to buy the company at the proposed price of $54.20 per share. Read more
“Free speech is the foundation of a functioning democracy, and Twitter is the digital public square where issues vital to the future of humanity are debated,” Musk said in a statement.
Former Twitter CEO Jack Dorsey weighed in on the deal Monday night with a series of tweets thanking both Musk and current Twitter CEO Parag Agrawal for “getting the company out of a bind.” impossible”.
“Twitter as a business has always been my only problem and my biggest regret. It belongs to Wall Street and the advertising model. Taking it back to Wall Street is the right first step,” he said.
Twitter shares rose 5.7% on Monday to end at $51.70. The deal represents a nearly 40% premium to the closing price the day before Musk revealed he had bought a stake of more than 9%.
Even so, the offer is well below the $70 range where Twitter was trading last year.
“I think if the company had had enough time to transform, we would have done a lot more than what Musk is currently offering,” said Jonathan Boyar, chief executive of Boyar Value Group, which owns a stake in Twitter.
However, he added, “if the public markets don’t value a business properly, eventually an acquirer will.”
Musk’s move continues a tradition of billionaires buying control of influential media platforms, including the 2013 acquisition of The Washington Post by Jeff Bezos.
Twitter said Musk secured $25.5 billion in debt and margin loan financing and provided an equity commitment of $21 billion.
Musk, who is worth $268 billion according to Forbes, said he’s not primarily concerned with Twitter’s economics.
“Having a broadly inclusive, maximum-trust public platform is extremely important for the future of civilization. I don’t care about the economy at all,” he said at a recent public lecture. .
Musk is chief executive of electric car maker Tesla Inc (TSLA.O) and aerospace company SpaceX, and it’s unclear how long or what he’ll be spending on Twitter.
“Once the deal is done, we don’t know which direction the platform will go,” Agrawal told employees Monday. Read more
Edward Moya, an analyst at currency brokerage OANDA, said in an email to clients that the deal was “great news for Twitter shareholders as it doesn’t look like the company is going to get it right anytime soon.” .
But he also said, “Tesla shareholders can’t be happy that Musk has to divert even more attention away from winning the EV (electric vehicle) race.”
Still, Musk’s 84 million strong Twitter account is seen as an important and free PR and marketing tool for Tesla.
The Twitter transaction has been approved by the company’s board of directors and is now up for a shareholder vote. No regulatory hurdles are expected, analysts said.
Wedbush analyst Daniel Ives said the company’s board had its back “against the wall” once Musk detailed his financial package and no other bidders emerged.
Although only about a tenth the size of much larger social media platforms like Meta Platforms Inc’s (FB.O) Facebook, Twitter has been credited with helping to spawn the Arab Spring uprising and accused of having played a role in the January 6. 2021, storming of the US Capitol.
After Twitter banned Trump over concerns about inciting violence following his supporters’ attack on the US Capitol, Musk tweeted, “A lot of people are going to be very unhappy with the high tech off the coast west as the de facto arbiter of free speech.”
Trump, whose company is building a Twitter rival called Truth Social, said in a Fox News interview on Monday that he would not return to Twitter.
The White House declined to comment on Musk’s deal on Monday, but said President Joe Biden has long been concerned about the power of social media platforms.
“Our concerns are not new,” White House spokeswoman Jen Psaki said, adding that the platforms must be held accountable. “The president has long spoken about his concerns about the power of social media platforms, including Twitter and others, to spread misinformation.”
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Reporting by Greg Roumeliotis in New York; Additional reporting by Krystal Hu, Lewis Krauskopf and Megan Davies in New York, Noel Randewich in San Francisco, Sheila Dang in Dallas, Andrea Shalal and Trevor Hunnicutt in Washington and Shivam Patel in Bengaluru; Written by Peter Henderson; Editing by Anna Driver, Kenneth Li, Matthew Lewis and Edwina Gibbs
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