When Elon Musk takes over Twitter


Photo: AFP

Elon Musk on Monday reached an agreement to buy Twitter for roughly $44 billion and claims to revamp the social media platform by providing a more open and robust policy on "free speech".

The Tesla CEO has said he wanted to own and privatize Twitter to make it “better than ever” with new features, reducing spam accounts and friendly algorithms. Meanwhile, shares of Twitter rose around 5% on Monday to $51.70 per share soon after the news of acquisition came out.

How Musk bought Twitter inc?

On April 14, Musk announced an offer to buy Twitter for $54.20 per share. While the stock market responded favourably since Musk made his offer, it is well below the high of $77 per share it reached in February 2021. Musk is off to a good start , given that Twitter’s board has unanimously approved his offer and is recommending shareholders do the same.

Earlier, Twitter board had adopted an anti-takeover clause, which disallowed Musk to increase his stock in his company above 15%. Currently, he holds 9% stock in the company.

Following this, Musk lined up $46.5 billion for purchase, including $21 billion from his personal fortune, $13 billion as financing from Morgan Stanley and the other banks, and $12.5 billion in loans secured through Musk's Tesla stock. Musk also stated that other investors can also contribute to the financing.

Shareholders and the future of the company board!

Twitter's board share ownership is very similar to other companies. Excluding 2% stock owned by Twitter founder Jack Dorsey, Twitter directors held a median ownership stake of 0.003%. The biggest shareholder in the company as of March 2022 is the 'Vanguard Group', which disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) that its funds held 82.4 million(10.3%) shares. Morgan Stanley holds around 67 million(8.4%), and BlackRock Inc owned 52.1 million(6.5%).

Investors had essentially steered clear of Twitter stock, which prior to Musk's takeover bid was worth 12 percent less than it was priced when the company's shares first went public more than eight years ago. It is still unclear how Musk is looking to workout his policies amidst taking the company private.

Despite its reach and impact, the San Francisco-based one-to-many messaging platform has struggled to generate the kind of revenue seen by social media peers such as Facebook and TikTok.

Since its founding in March of 2006, Twitter has amassed 217 million daily active users, more than 80 percent of them outside the United States.

Twitter did not taste profit until the end of 2017, and the following year was its first to finish financially in the black.

It is worth noting that Twitter reported a loss of $221 million last year.

(with Inputs from agencies)

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