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Elon Musk finally made the offer to buy Twitter for $41.39 billion at $54.20 per share in cash following several days of speculation. The world’s richest man took to the platform to make the announcement of the hostile takeover and also wrote a letter to chairman Bret Taylor.
The Tesla CEO shared the reason behind his initial investment on Twitter and claimed that the social networking site should be transformed into a “private company.” He said,
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Musk also mentioned that the offer is “last and final” and stated that he would reconsider his position as a shareholder if authorities decline his proposal. He shared,
“I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.”
The business tycoon also noted that Twitter has “potential” and said that he would unlock all potential if given a chance. He even shared the filing with the US Securities and Exchange Commission (SEC) in connection with the offer.
A look into the meaning of hostile takeover
Hostile takeover is a term that is used to define the acquisition of one company by another company. According to Investopedia, the company being taken over is called the target company and the company executing the hostile takeover is called the acquirer.
In case of a hostile takeover, the acquirer reportedly approaches the company's shareholders directly or fights in an attempt to replace the management of the target company to complete the acquisition. A hostile takeover approval is usually done either through a tender offer or a proxy fight.
In most cases of hostile takeovers, the management of the target company does not wish to move with the acquisition. Some companies even use debatable strategies like the golden parachute, the Pac-Man defense, crown-jewel defense, and the poison pill to deal with the takeover.
As per Clear Tax, one major factor behind hostile takeovers is when the acquirer thinks that the target company is “undervalued” and a complete acquisition would be beneficial for the company in the long run.
Other hostile takeover bids also stem from strategic moves by investors who aim to change the management and operations of the target company.
In the case of Elon Musk’s hostile takeover of Twitter, the billionaire has cited the need for the company to go private to make certain changes as the key reason behind the acquisition offer. He wrote to Twitter chair of the board Bret Taylor saying,
“I believe that the company should be private to go through the changes that need to be made. After the past several days of thinking this over, I have decided I want to acquire the company and take it private.”
The SpaceX founder also mentioned that he is not playing a “back-and-forth game” but placing his “best and final offer.” He said that the offer is “high price” and the move will be loved by all shareholders.
Elon Musk also shared that his offer is not a threat but a good investment to bring new changes to Twitter. He even mentioned that the changes would not be possible “without taking the company private.”
Netizens react to Elon Musk’s Twitter takeover offer
Speculation regarding Elon Musk’s Twitter takeover began right after he purchased a 9.2 percent stake in the company earlier this month. Shortly after, the microblogging site announced that the Tesla CEO would be appointed to its board.
Although Musk did not join the board, he remained an independent investor in the company and eventually made the offer to acquire Twitter as a whole. Musk’s announcement left the internet divided, and several people took to social media to share their personal reactions to the situation.
As reactions continued to pour in online, Twitter confirmed that it has received an “unsolicited and non-binding” proposal from Elon Musk. Twitter said,
“Twitter Inc has confirmed it has received an unsolicited, non-binding proposal from Elon Musk to acquire all of the company's outstanding common stock for $54.20 per share in cash.”
Twitter also mentioned that its Board of Directors will “carefully review the proposal to determine the course of action” and make the final decision by keeping the best interest of the company and all its stockholders in mind.
