Musk Manages To Purchase Twitter For $44 Billion

Musk Manages To Purchase Twitter For $44 Billion
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On Monday, Elon Musk secured a deal to acquire Twitter Inc for $44 billion in cash, transferring ownership of the social media network used by millions of people and world leaders to the wealthiest individual in the world.

It’s a watershed moment for the 16-year-old firm, which rose to become one of the world’s most influential public squares but now faces many obstacles.

Musk, a self-described “free speech absolutist,” has slammed Twitter’s censorship. He wants Twitter’s algorithm for selecting messages to be made public, and he opposes giving advertisers too much control over the platform.

Political activists predict that there will be less moderation under a Musk administration and the reinstatement of prohibited individuals such as former President Donald Trump.

Conservatives applauded the idea of fewer restrictions, while human rights groups expressed concerns about an increase in hate speech.

Musk has also campaigned for changes to the service that would make it more user-friendly, including an edit button and a way to combat “spambots” that send out many unwelcome tweets.

The deal’s discussions quickened over the weekend when Musk wooed Twitter shareholders with financial details of his bid, which appeared doubtful last week.

Twitter began negotiating with Musk to purchase the firm at Musk’s suggested $54.20 per share price under pressure.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement.

Late Monday, former Twitter CEO Jack Dorsey tweeted about the arrangement, thanking Musk and new Twitter CEO Parag Agrawal for “pulling the company out of an impossible situation.”

“Twitter as a company has always been my sole issue and my biggest regret. Wall Street and the ad model have owned it. He said that taking it back from Wall Street is the correct first step,” he said.

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On Monday, Twitter’s stock surged 5.7% to $51.70. The purchase price is over 40% more than the closing price the day before Musk announced his purchase of more than 9% of the company.

Nonetheless, the offer is far lower than the $70 range Twitter was trading in last year.

“I think if the company was given enough time to transform, we would have made substantially more than Musk is currently offering,” said Jonathan Boyar, managing director at Boyar Value Group, which holds a stake in Twitter.

However, he added, “If the public markets do not properly value a company, an acquirer eventually will.”

Musk’s decision follows other billionaires who have purchased control of prominent media platforms, such as Jeff Bezos’ purchase of the Washington Post in 2013.

Musk has obtained $25.5 billion in debt and margin loan funding and a $21 billion equity commitment, according to Twitter.

According to Forbes, Musk is worth $268 billion and has stated that the economics of Twitter is not his primary focus.

“Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. I don’t care about the economics at all,” he said in a recent public talk.

Musk is the CEO of both Tesla Inc and SpaceX, and it’s unclear how much time he’ll spend on Twitter or what he’ll do with it.

“Once the deal closes, we don’t know which direction the platform will go,” Agrawal told employees. read more

In a note to clients, Edward Moya, an analyst at currency broker OANDA, said the deal was “excellent news for Twitter shareholders given it doesn’t appear like the firm will get things right anytime soon.”

“Tesla shareholders can’t be thrilled,” he added, “since Musk will have to shift even more focus away from winning the EV (electric vehicle) race.”

Despite this, Musk’s 84 million Twitter followers are viewed as a crucial free public relations and marketing tool for Tesla.

The board of directors of Twitter authorized the deal, which is now up for a shareholder vote. Analysts believe there will be no regulatory roadblocks.

Despite being a tenth of the scale of significantly more prominent social media platforms like Meta Platforms Inc’s Facebook, Twitter has been attributed for helping to spawn the Arab Spring revolt and accused of playing a role in the storming of the United States Capitol on Jan. 6, 2021.

“Many people are going to be incredibly unhappy with West Coast high tech being the de facto arbiter of free expression,” Musk tweeted after Twitter banned Trump over concerns about the encouragement of violence following his supporters’ attack on the US Capitol.

In a Fox News interview on Monday, Trump, whose company is developing a Twitter competitor called Truth Social, claimed he will not return to the platform.

According to the White House, President Joe Biden has long been concerned about the dominance of social media platforms, which declined to comment on Musk’s deal on Monday.

“Our concerns are not new,” said White House spokesperson Jen Psaki, adding that the platforms need to be held accountable. 

“The president has long talked about his concerns about the power of social media platforms, including Twitter and others, to spread misinformation.”

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