Elon Musk Edges Closer To Buying Twitter For $43 Billion

by Swarajya Staff - Apr 25, 2022 08:42 PM +05:30 IST
Elon Musk Edges Closer To Buying Twitter For $43 BillionElon Musk

Twitter is edging closer to a deal to sell itself to Elon Musk. The deal could be announced as soon as today. This development came to light after a story by the Wall Street Journal claimed that Twitter is reconsidering Musk's offer after it became clear that Musk has secured finances for his offer.

According to reports, the two sides are discussing details such as a timeline to close the potential deal and any fees that would be paid 'if an agreement were signed and then fell apart.'

These discussions follow Twitter's Sunday morning board meeting in which Musk's offer was discussed. Musk obtaining financing for his offer was a turning point for how twitter's board viewed his offer. Twitter's stocks rose to $51.23 today, that is a surge of around 4 per cent.

An agreement has not been finalised yet and may still fall apart. Musk intends to buy the social network and take it private.

Musk's proposal was earlier deemed 'not serious' because it wasn't clear if he had secured the financing to back his offer. The situation changed on Thursday when a security filing was made public. This filing laid out how Musk had secured financing from Morgan Stanley, an investment bank, and a group of other lenders. According to the filing, they are offering Musk $13 billion in debt financing along with $12.5 billion in loans against his stock in Tesla. According to Musk he would use another $21 billion in cash to buy rest of Twitter's equity.

Musk has put pressure on Twitter's board by disseminating the information widely that details how little of a stake they own despite being board members. He suggested that this leads to a misalignment between the board's interest and the interests of the shareholders. He went on to question the board's capability of fulfilling its fiduciary duties.

Musk has also indirectly hinted that he is considering a tender offer if the board didn't consider his offer seriously. A tender offer is a hostile takeover manoeuvre in which the outside interested party circumvents the board by asking shareholders to sell their shares directly to them.

Musk's offer is $54.20 per share. Twitter has touched that price only twice in the past decade. Once in 2013 shortly after its IPO and once in the 2021 bull market. If board turns down his offer and he chooses the tender offer option, the board will have very little leverage left.

Assuming Musk succeeds in closing the deal, the first question is this, will Donald J Trump be back on Twitter, if yes, when? With the midterm elections nearing in America, this is a prescient question.

It is arguably safe to assume that if Twitter didn't censor the Hunter Biden laptop story before the elections, the result of the US elections might have been different. Twitter has fewer users compared to other social media platforms like Facebook, Instagram and all, but it is important because Twitter is where elite consensus emerges. Twitter is where elites coverage like a hive, other social media platforms are merely people trying to portray how happy they are with their life when in reality that isn't the case (paraphrasing Elon Musk).

His exact words were, "it is (Instagram is) fake, people portray their life is much more exciting than it really is, some of the happiest people on it are some of the saddest people in real life."

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