Elon Musk agreed to buy Twitter Inc (TWTR.N) for $44 billion in cash, transferring ownership of the social media network used by millions of people and world leaders to the world’s richest person.
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 a slew of 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 on the platform.
Political activists predict that under a Musk administration, there will be less moderation 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 as an edit button and a way to combat “spam bots” that send out a large number of 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.
In a statement, Musk added, “Free speech is the core of a functional democracy, and Twitter is the digital town square where subjects crucial to humanity’s future are debated.”
Late Monday, former Twitter CEO Jack Dorsey tweeted about the arrangement, thanking both Musk and new Twitter CEO Parag Agrawal for “pulling the company out of an impossible situation.”
“My only gripe with Twitter has always been that it is a for-profit company. Wall Street and the advertising model have both owned it. Taking it back from Wall Street is the first step in the right direction “he stated
On Monday, Twitter’s stock surged 5.7 percent 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 at which Twitter was trading last year.
“I believe we would have made much more than what Musk is currently offering if the company had been given the time to evolve,” said Jonathan Boyar, managing director of Boyar Value Group, which owns a stake in Twitter.
“If the public markets do not appropriately value a company, an acquirer will eventually do so,” he continued.
Musk’s decision follows in the footsteps of 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, as well as a $21 billion equity commitment, according to Twitter.
According to Forbes, Musk is worth $268 billion and has stated that the economics of Twitter are not his primary focus.
“To the future of civilization, having a public platform that is maximally trusted and broadly inclusive is critical. I don’t give a damn about economics “In a recent public speech, he stated.
“We don’t know which path the platform will take once the deal complete,” Agrawal told employees on Monday.
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.
When Musk presented his financing plan and no other bidders surfaced, Wedbush analyst Daniel Ives claimed the company’s board of directors was “against the wall.”
Despite being a tenth the size of significantly larger social media platforms like Meta Platforms Inc’s (FB.O) Facebook, Twitter has been attributed with helping to spawn the Arab Spring revolt and accused of playing a role in the assault of the United States Capitol on Jan. 6, 2021.
“A lot of 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 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.
President Joe Biden has long been concerned about the dominance of social media platforms, according to the White House, which declined to comment on Musk’s deal on Monday.
“Our concerns are not new,” White House press secretary Jen Psaki said, adding that the platforms must be held accountable. “The president has long expressed his concern about the spread of misinformation on social media sites such as Twitter and others.”