Elon Musk speaks at the World Car News Congress at the Renaissance Center in Detroit, Michigan, January 13, 2015. REUTERS / Rebecca Cook
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April 14 (Reuters) – Elon Musk took to Twitter (TWTR.N) with a $ 41 billion cash bid on Thursday, sparking a jump in shares of social media giant that Tesla’s CEO said should be private. to grow and become a platform for freedom of speech.
“Twitter has tremendous potential. I will unlock it, “Musk said in a letter to the Twitter board on Wednesday, which was made public in regulatory documents on Thursday.
Musk’s offer price of $ 54.20 per share represents a 38% surcharge on Twitter on April 1, the last trading day before more than a 9% stake in Tesla’s CEO (TSLA.O) in the social media platform to be made public.
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The billionaire turned down an offer to join the Twitter board this week after revealing his stake, a move that analysts say signaled his intention to take over the company, as a seat on the board would limit his stake to just under 15%. Read more
“Since I made my investment, I now realize that the company will neither thrive nor serve this social imperative in its current form. Twitter needs to be transformed as a private company, “Musk said in a letter to Twitter chairman Brett Taylor.
Musk, who calls himself an absolutist of free speech, criticized the social media platform and its policies and recently conducted a poll on Twitter asking users if they believe it adheres to the principle of free speech.
“My offer is my best and final offer and if it is not accepted, I will have to reconsider my position as a shareholder,” Musk added.
Twitter will review the offer with advice from Goldman Sachs and Wilson Sonsini Goodrich & Rosati, a source told Reuters.
Shares on Twitter jumped 12% in pre-marketing, while those on Tesla fell about 1%. Based on Twitter’s closing price of $ 45.85 on Wednesday, its price in pre-market trading in New York suggested a 35% chance that the company would accept Musk’s offer.
The total value of the deal of $ 41 billion is estimated on the basis of 763.58 million shares outstanding, according to Refinitiv.
Musk said US investment bank Morgan Stanley acted as financial adviser on his proposal. He did not say how he would finance the deal if it took place.
“SERIAL FAILURE”
“The big question for the Twitter board now is whether to accept a very generous offer for a business that has been underperforming and tends to treat its customers with indifference,” said Michael Huson, chief market analyst at CMC Markets. , after the message. from Musk’s proposal.
Musk has amassed more than 80 million followers since joining Twitter in 2009, and has used it to make several statements, including irritating a private deal for Tesla that put him in hot water with regulators.
He was also sued by former Twitter shareholders who say they missed the recent increase in his share price because he waited too long to reveal his stake. Read more
The lower-than-expected Twitter add-ons in recent months have raised doubts about its growth prospects, even as it pursues major projects such as audio chat rooms and newsletters.
“It would be difficult to get other bidders / consortium and the Twitter board will probably be forced to accept this offer and / or start an active process of selling on Twitter,” Wedbush Securities analyst Daniel Ives wrote in a client note.
“There will be many questions about the financing, regulation, balancing of Musk’s time (Tesla, SpaceX) in the coming days, but ultimately based on this submission, Twitter will accept an offer now or never,” Ives said.
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Report by Xavi Mehta, Uday Sampat and Greg Romeliotis; Edited by Anil D’Silva and Alexander Smith
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