Elon Musk struck a deal on Monday to buy Twitter for around $44 billion, in a victory for the world’s richest man to take over the influential social network frequented by world leaders, celebrities and cultural trendsetters.
Twitter agreed to sell to Mr Musk for $54.20 a share, a 38% premium to the company’s share price this month before he revealed he was the main shareholder of the company. According to data compiled by Dealogic, it would be the biggest deal to take a company private — something Mr. Musk said he would do with Twitter — in at least two decades.
“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 announcing the announcement. deal. “Twitter has enormous potential – I look forward to working with the company and the user community to unlock it.”
The blockbuster deal caps what seemed an unlikely attempt by notorious mercurialist Mr Musk, 50, to buy Twitter – and immediately raises questions about what he will do with the platform and how his actions will affect the discourse online in the world.
The billionaire, who has more than 83 million Twitter followers and has scoured the service tossing jokes and memes, has repeatedly said he wants to ‘transform’ the platform by promoting more freedom to expression and giving users more control over what they see in it. . By taking the company private, Mr. Musk could work on the service away from the prying eyes of investors, regulators and others.
Still, the scrutiny is likely to be intense. Twitter isn’t the biggest social platform – it has more than 217 million daily users, compared to billions for Facebook and Instagram – but it has played an outsized role in shaping narratives around the world. Political leaders have turned it into a megaphone, while corporations, celebrities and others have used it to sharpen images and create brands.
In recent years, Twitter has also come under fire, with some users posting misinformation and other toxic content on the service. Former President Donald J. Trump frequently took to Twitter to insult and inflame, until he banned it after the Jan. 6 riot on Capitol Hill last year. The company has repeatedly created policies on the fly to deal with unexpected situations.
Mr. Musk himself has had a difficult relationship with online discourse. This year, he tried to cancel a Twitter account that tracked his private jet, citing personal and security reasons. And he got in trouble with regulators because of his tweets.
On Monday, he tweeted that he hopes his worst critics stay on Twitter because “that’s what free speech means.” He added in his statement that he hopes to increase trust by making Twitter’s technology more transparent, defeating the bots that spam people on the platform, and “authenticating all humans”.
Bridget Todd, director of UltraViolet, a women’s rights organization, said Mr Musk’s deal could be dangerous for online speech because it may not be supportive of Twitter’s community standards and ban users who violate these standards.
“It’s a massively slippery slope,” she said.
In Washington, Republicans, who have long accused Twitter of censoring their views, cheered Mr Musk’s deal.
“I hope Elon Musk helps bring Big Tech’s history of censoring users who have a different point of view under control,” Senator Marsha Blackburn of Tennessee said in a statement. Tweeter.
Mr. Trump told Fox News on Monday that he would stick to posting on his own social network, Truth Social. “I don’t go on Twitter,” he said, but added that he hoped “Elon buys Twitter because he will make improvements there.”
Democrats were held back on the deal. Jen Psaki, the White House press secretary, declined to comment specifically on the sale of Twitter, but said President Biden “has long been concerned about the power of large social media platforms” and that they should be “held responsible for the damage they cause”. She said Mr Biden supported changes to online speech and antitrust laws.
Beyond speech issues, Twitter faces questions about its business. For years, the company struggled to win new users and retain others. Its advertising business, which is Twitter’s main way of generating revenue, has been inconsistent. Twitter hasn’t made a profit for eight of the past 10 years.
Last year, the company lost $493 million on revenue of $5.57 billion. In contrast, Meta, the company formerly known as Facebook, posted profits of $39 billion and revenue of $118 billion last year.
Twitter, which went public in 2013, has also had a tumultuous corporate history. He has repeatedly dealt with board malfunctions and dramas with his founders, and has been courted by other interested buyers in the past, including Disney and Salesforce. In 2020, activist investment firm Elliott Management took a stake in Twitter and called on Jack Dorsey, one of its founders, to step down as chief executive. Mr Dorsey resigned last year.
“This business is very under-monetized, especially compared to other platforms and competitors like Facebook,” said Pinar Yildirim, professor of marketing at the Wharton School of Business at the University of Pennsylvania. “If you look at it from a purely business perspective, there’s definitely room for improvement.”
In a statement, Bret Taylor, chairman of Twitter, said the board had “conducted a thoughtful and thorough process” on Mr. Musk’s offer and that the deal would “offer a substantial cash bonus” to the shareholders.
Regulators are unlikely to seriously challenge the deal, former antitrust officials said, because the government more often than not steps in to stop a deal when a company buys a competitor.
The deal closed within weeks. Mr Musk, who also runs electric car maker Tesla and rocket maker SpaceX, started buying shares of Twitter in January and revealed this month that he had amassed a stake of more than 9%.
This immediately sparked a guessing game about what Mr. Musk planned to do with the platform. Twitter executives initially welcomed him to the board, but he backtracked within days and instead launched a bid to buy the company.
Any deal initially seemed unlikely as the contractor did not say how he would fund the deal. Twitter executives also seemed skeptical, given that it was hard to discern just how much Mr. Musk was joking. In 2018, for example, he tweeted that he planned to take Tesla private and falsely claimed he had “secured funding” for such a deal.
Twitter responded to Mr Musk’s offer by implementing a “poison pill”, a defensive maneuver that prevented the billionaire from accumulating more than 15% of the company’s shares.
The skepticism began to dissipate last week when Mr Musk revealed in a securities filing that he had secured pledges worth $46.5 billion to fund his Twitter bid.
Morgan Stanley and a group of other lenders offered $13 billion in debt financing and another $12.5 billion in loans against Mr. Musk’s shares in Tesla. It was expected to add about $21 billion in equity financing. Twitter did not provide equity financing details on Monday. He also did not set any conditions for Mr. Musk’s funding that would prevent him from completing the deal.
The funding commitments forced Twitter to seriously weigh Mr. Musk’s offer, people familiar with the matter said, especially as he threatened to take the offer directly to shareholders as part of a hostile offer.
Over the weekend, in a series of calls and video meetings, Twitter’s board and the billionaire’s decision makers agreed terms of purchase. The teams worked late Sunday and into Monday on the final details.
Twitter’s financial advisers were Goldman Sachs, JPMorgan Chase and Allen & Company, while Morgan Stanley was Mr Musk’s primary financial adviser.
How active Mr Musk plans to be on Twitter is unclear. Among the unanswered questions are who he might choose to lead the company and his involvement in running the service. In addition to running Tesla and SpaceX, Mr. Musk owns other companies, such as Neuralink, which aims to create a computer interface for the human brain, and the Boring Company, which makes tunnels.
Current Twitter chief executive Parag Agrawal took over in November. Mr Agrawal has worked to “decentralize” the social network so that Twitter makes fewer content moderation decisions and users have more control over their social feeds. He is expected to remain in charge at least until the deal closes.
The number of Twitter employees willing to pursue Mr. Musk’s vision is also uncertain. Some employees were frustrated by the lack of communication about the buyout fight.
At a company meeting with employees on Monday afternoon, Mr Agrawal and Mr Taylor, the chairman, acknowledged that it was an emotional day and that workers were most likely processing the news of a sale.
“It’s important to recognize that you all have different feelings about what’s going on,” Mr. Agrawal said at the meeting, which The New York Times listened to. He said it could take three to six months for the deal to close, so “right now we’re operating Twitter like we always have.”
The deal, which has been approved by Twitter’s board, is expected to close this year, subject to a vote by Twitter shareholders and certain regulatory approvals.
Kate Conger, Cecilia Kang and David McCabe contributed report.
