Elon Musk buys Twitter for BRL 214 billion

O Twitter accepted the Elon Musk buyout offer this Monday (25), after the billionaire got funding to honor the proposal, according to sources at the agency. Reuters. The official announcement took place this afternoon on Monday. Elon Musk buys Twitter with a final offer slightly higher than the previous one made by the billionaire, and is around R$ 214 billion (US$ 44 billion). Previously, the billionaire bought 9% shares of the company and then rejected joining the company's board of directors.

Bret taylor, president of Twitter, confirmed the agreement on his profile. Look above.

It was speculated that Twitter would reject the offer Musk made last week for not saying how he would pay for it. However, after the billionaire disclosed that he had secured private funding of more than $46 billion, the American newspaper says the social network is making an assessment and more willing to try to negotiate.

Already the sources of The Wall Street Journal said that in recent days Musk has reiterated Bret Taylor that he would not back down on his $54,20 a share buyout offer. The likely turnaround on Twitter's part comes after Musk met privately last Friday with several of the company's shareholders to extol the virtues of his proposal, while urging the Board to make a decision soon.

What is Elon Musk's purpose in buying Twitter?

It is not today that the owner of Tesla e SpaceX has the desire to make changes in the social network they use most in their daily lives. The information in the document proves that if shareholders accept the proposal, Musk will take Twitter private. This means that the company will no longer appear on the New York Stock Exchange and will be owned by Elon Musk.

The same document informs that the billionaire believes that “Twitter has the potential to become a platform for freedom of expression around the world”, but for that to happen, the social network needs to become a private company.

The billionaire believes that free speech issues plague both the platform and the United States more broadly, and would have committed to developing solutions even if his offer to buy is not accepted.

It is worth remembering that the topic was publicly raised by the businessman in March last year, in a poll asking whether Twitter strictly adheres to freedom of expression on the platform. Criticizing the social network, he said that “freedom of expression is essential for a functioning democracy”. 

Still according to The Wall Street Journal, Musk is fully confident that Twitter's management can't bring the company's stock to the price he offered on its own, given the business problems and the persistent inability to fix them. For him, one of the measures is to reduce the platform's dependence on advertising, in addition to implementing simpler changes, such as allowing longer tweets.

Support

The billionaire is not in this “war” alone, as he already has some shareholders supporting him. One example is Lauri Brunner, who manages the large cap growth fund at Thrivent Asset Management LLC, sees Musk as a skilled administrator:

 “He has an established track record at Tesla, is the catalyst for delivering strong operational performance on Twitter,” said Brunner.

A thrivent, based in Minneapolis, has an approximately 0,4% stake in Twitter worth $160 million and is also a shareholder in Tesla.

Within this scenario, Musk has already said that he is considering taking his takeover offer directly to shareholders through the launch of a public offering. Even if he were to garner significant support from this move, he would still need to devise a way around the legal maneuver that prevented him from increasing his stake to 15% or more.

Twitter took care

A tactic often employed to push an offer, seeking to gain control of the target's council, is out of reach for now. Twitter's directors have staggered the terms, meaning that a dissenting shareholder would need several years to gain control, rather than a single shareholder vote.

The company last year tried to phase out the board's staggered terms as they are frowned upon by the corporate governance community, but few shareholders voted to do so.

Now, the company will try to do that again at this year's annual meeting, scheduled for May 25. Only two directors are running for re-election, and it's too late for Musk to apply. At Twitter shares are trading below their offer price of purchase since he made the offer on April 14th. It is usually a sign that shareholders are skeptical of a deal.

The financing included more than $25 billion in debt from nearly every tier-one investment bank in the world, plus Twitter's two advisers. The remainder was $21 billion of stock that Musk would provide himself, likely selling off existing stakes in his other businesses, such as Tesla.

The speed with which funding has arrived and the market has been liquidating in recent days — which makes the cash offer look relatively more attractive — likely contributed to Twitter's greater willingness to accept Musk's proposal.

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Sources: Reuters | The Wall Street Journal