The latest developments
Elon Musk wants to buy short message service Twitter for $44 billion. The board of directors approved the takeover at the end of April; confirmation from the shareholders is still pending. The most important questions and answers about the takeover offer.
Elon Musk wants to pay $44 billion for Twitter.
The latest developments
- Lawyers for the online service Twitter accuse tech billionaire Elon Musk of breaking a confidentiality agreement. Musk wrote this on Sunday night (May 15). From the point of view of the legal department, he had revealed too much about Twitter’s procedure for determining automated tweeting accounts. Musk said on Saturday that his team would randomly select 100 followers of the online service’s Twitter account and see how high the proportion of fake and bot accounts would be among them. The number is rather low for such a survey. Musk obviously wanted that to be noticed: He chose them because Twitter also uses a test group of this size, he then emphasized. The Twitter legal department then complained that this number was confidential, Musk later wrote.
- Elon Musk temporarily suspended his deal to buy Twitter on Friday (May 13). He first wants to wait for calculations that accounts for which there are no real users actually make up less than five percent, wrote Musk in a tweet. The online service published this estimate earlier in the week. Musk had previously stated that he wanted to ban accounts that are used to send spam messages from the platform. Twitter stock fell nearly a quarter in premarket trading after Musk’s tweet, trading at around $34.50. Shortly thereafter tweeted However, he said his commitment to the purchase would remain. Musk is known for impulsive tweets and statements that he often later puts into perspective.
- Elon Musk secures $7 billion from outside investors and therefore has to borrow less than expected. This became known on Thursday (May 5) in reports from several American media. Accordingly, the Saudi Prince al-Waleed bin Talal, a nephew of the ruler King Salman, supports the takeover with 1.9 billion dollars. Larry Ellison, co-founder of Oracle, is also committed with a billion. Other backers include crypto exchange Binance.com and two venture capital firms, Sequoia Capital and Andreessen Horowitz.
- Elon Musk wants to bring Twitter back to the stock market after a few years of private ownership. He said this to the American media on Tuesday (May 3). The renewed IPO could take place in about three years, said Musk.
- Donald Trump has ruled out a return on Twitter. The former US president told Fox News on Monday (April 25) that he will not return to short messaging, even if his account is restored after Musk took over. “I’m not going to Twitter, I’m going to stay on Truth Social,” he said. Truth Social is Donald Trump’s social network that is due to launch in the United States soon, but its launch has been delayed due to technical glitches. Go to Article
How did the takeover come about?
On April 4, 2022, Elon Musk, the head of Tesla and SpaceX, announced that he had become the largest Twitter shareholder with a stake of over 9 percent. A few days later, in a letter dated April 14 to the Twitter board of directors, the multi-billionaire tabled a takeover bid for the entire company. He’s paying $54.20 a share, he said. The company’s top management initially threw itself across and reacted with a “poison pill” under stock corporation law that would have made an acquisition significantly more expensive.
How does Musk plan to pay 44 billion?
On April 25, Twitter dropped opposition to its takeover by tech billionaire Elon Musk. The online service announced that a deal had been agreed with Musk. Musk could take over Twitter for $44 billion. The decisive factor was probably that the 50-year-old, who is considered to be very erratic, presented real financing guarantees.
It seems that Twitter wanted to secure itself financially in case the takeover fails after all. Musk is said to have committed $25.5 billion in loan commitments and committed to contributing up to $21 billion of his own funds.
Saudi Prince al-Waleed bin Talal, a nephew of the ruler King Salman, is supporting Musk with $1.9 billion for the takeover. Larry Ellison, co-founder of Oracle, is also committed with a billion. Other backers include crypto exchange Binance.com and two venture capital firms, Sequoia Capital and Andreessen Horowitz.
Musk has also sold shares in his electric car company Tesla worth $4 billion and pledged more against bank loans.
Now it still needs the approval of the shareholders, who should give Musk their shares at the offered price. He wants to pay Musk $54.20 per Twitter share. Once Musk owns Twitter stock, he plans to take the company public and sell it back in a couple of years.
Why does Musk want to buy Twitter?
Musk wants to establish Twitter as a global platform for freedom of expression and thus strengthen democracy. This shows a opinion poll Musk from the end of March: “Freedom of expression is essential for a democracy. Do you think Twitter respects that concept?” Musk asked his followers. Within a very short time, two million people responded to the survey, with over 70 percent saying no.
The day after, Musk wrote that Twitter is now what the village square used to be: an important discussion forum. However, since the short message service fails to enforce freedom of speech, it undermines democracy. Musk justifies his takeover bid with social considerations.
As the owner, Musk wants to be involved in product design. Among other things, he would like to introduce an edit button with which tweets that have already been published can be edited, and he would like to prevent bots and spam on the platform.
Does Twitter Restrict Freedom of Speech?
Social networks such as Twitter or Facebook make controversial decisions every day about which content is deleted or provided with warnings. In doing so, they deliberately restrict freedom of speech on their platform.
In particular, politicians who spread anti-establishment ideas, conspiracy theories or false claims suffer from this – above all, of course, Donald Trump, who was banned from Twitter after the storming of the Capitol. Critics have repeatedly accused Twitter of distorting democratic discourse, favoring liberal opinions and suppressing conservative ideas.
With his takeover offensive, Elon Musk is now giving these voices a boost and using his influence to spread their arguments.
However, Musk’s user behavior to date shows that the platform already allows controversial opinions. In the early days of the Corona crisis, Musk downplayed the dangers of the disease and criticized pandemic measures as “fascist”. He also compared Canadian Prime Minister Trudeau to Hitler when he spoke out in favor of ending the truck drivers’ protests, but deleted the tweet again when major media reported about it and the Auschwitz memorial criticized the comparison.
What changes does Musk intend to make?
After a takeover of Twitter, tech billionaire Elon Musk is considering introducing fees for the online service. “Twitter will always be free for casual users but may cost a little for commercial/government users,” he tweeted.
Musk also wants all users to be authenticated. To do this, he wants to fight bots and spam more on the platform and introduce a functionality that allows you to edit tweets that have already been sent.
Is this all just an Elon Musk joke?
It wouldn’t be the first time that Musk has announced a spectacular transaction with a company, but then backtracked in the end. This is what happened with Tesla in 2018.
Resourceful commentators also point out that Musk could be making a cannabis joke with the acquisition. The $54.20 per share tender offer includes the American slang code for cannabis: 420.
Musk drew a lot of media attention when he was filmed smoking a joint with podcaster Joe Rogan in 2018. He also once tweeted that he wanted to take Tesla private for $420 a share, which never happened.
If Musk backed out of the acquisition at the last minute, he would have to pay Twitter $1 billion in compensation. According to Forbes, Musk is worth $246 billion.
What is the value of Twitter?
Investors aren’t yet fully convinced that Musk can pull off the acquisition. In any case, the market value of the company at $38.5 billion is still well below the $44 billion offered by Musk. The share price, currently just over 50 dollars, is also not yet at the level of 54.20 dollars offered in the takeover bid.
Is a Musk takeover likely?
Twitter shareholders don’t seem to believe that Elon Musk will buy the company. Musk offered $54.20 per share. If investors were convinced that Musk was actually taking over Twitter, they would buy shares until the price matched Musk’s offer.
Tech columnist Nils Jacobsen arrives in his analysis Finally, Musk’s takeover bid is fair, at least when you look at Twitter’s current business performance in comparison to that of the Facebook group Meta.
Meta is now valued 14 times higher than Twitter on the stock exchange, but turns over 23 times. And Twitter is currently in the red. In 2021, the company made a loss of $221 million.
What’s next?
Twitter and Musk plan to complete the acquisition by the end of the year. Since Musk announced the takeover, there has been an uproar in the social media world: Many users fear that Musk will rebuild the short message service according to his own taste after the takeover.