Musk proposed paying $54.20 for each share of the influential social media company, an offer that values Twitter at $43 billion. The entrepreneur, who runs Tesla, SpaceX and other companies, already owns more than 9% of Twitter.
“I now realize the company will neither thrive nor serve [its] societal imperative in its current form,” Musk wrote in a letter to Bret Taylor, chairman of Twitter’s board of directors. “Twitter has extraordinary potential. I will unlock it.”
The offer, which Musk called his “best and final,” underscores the roller-coaster relationship between the tech mogul and Twitter since he revealed his stake in early April. Musk is one of the social media company’s largest shareholders. He then turned down a seat on Twitter’s board of directors, fueling speculation that Musk would engage in a hostile takeover of the company. Musk has also suggested that he might appeal directly to shareholders in a tender offer.
Here’s what you need to know about the ongoing saga between Twitter and Musk:
Why does Musk want to buy Twitter?
Musk, who has 81 million followers on Twitter, is an avid user of the service but also one of its loudest critics.
Musk tweeted a poll to his followers in March that asked whether users believed Twitter was protecting free speech. He said the poll results, in which roughly 70% of 2 million respondents answered “no,” would be “very important.”
The First Amendment applies to the government censoring speech but not to companies such as Twitter, which have their own rules about what isn’t allowed on the site.
“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy. What should be done?” he said in a follow-up tweet.
In his letter to Taylor, Musk said he invested in Twitter because he believes “in its potential to be the platform for free speech around the globe.” To accomplish his goal, Musk thinks the public company needs to go private.
What has Twitter’s response been?
Twitter said in a press release it’s received the offer and the board will “carefully review the proposal to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders.” On Friday, adopted a defensive tactic known as the “poison pill” that would make it tougher for Musk to increase his stake in the company. The shareholder rights plan doesn’t prevent the company from accepting an offer to buy the company or engaging with other parties, Twitter said.
Twitter CEO Parag Agrawal warned employees last week there would be “distractions ahead” but hasn’t commented publicly about Musk’s offer to buy Twitter. He told Twitter’s employees that the company was still evaluating Musk’s offer and would make a decision “in the best interest of our shareholders,” The Verge reported.
Twitter co-founder Jack Dorsey tweeted on Friday that “as a public company, twitter has always been ‘for sale.’ that’s the real issue.”
Twitter didn’t immediately respond to questions about when it plans to make a decision.
How likely is it that Twitter will accept the offer?
Some analysts say it’s unlikely to happen. Ali Mogharabi, a senior equity analyst for Morningstar, said in a note Thursday that the probability of Twitter accepting the offer is below 50%.
Wedbush Securities analyst Ygal Arounian noted that Twitter will likely look around for other buyers.
“In our view, the deal does not get done at this [price] level, and Twitter’s board will not view this offer, or Mr. Musk leading a change in the company as in the best interest of the company or shareholders,” Arounian wrote.
Some of Twitter’s biggest investors think the offer is too low. Saudi billionaire Prince Alwaleed bin Talal said in a tweet that he doesn’t believe Musk’s offer “comes close to the intrinsic value of @Twitter given its growth prospects.”
Fred Wilson, a venture capitalist and early investor in the company, tweeted that “Twitter is too important to be owned and controlled by a single person” and the platform should be decentralized.
The Information, citing a person familiar with the situation, reported that the board views Musk’s bid as “unwelcome” and that Twitter is expected to fight the takeover. Thoma Bravo, a private equity firm, is reportedly interested in buying Twitter as well, Reuters reported. is also thinking about participating in a Twitter bid, The Wall Street Journal reported on Monday.
Musk has suggested he wants a shareholders’ vote on his proposal. On Thursday, he tweeted a poll that asked if “Taking Twitter private at $54.20 should be up to shareholders, not the board.” On Saturday, Musk tweeted “Love Me Tender,” a song released by singer Elvis Presley in 1956. That tweet suggests that Musk is considering a type of public takeover bid known as the tender offer where he would offer to buy stock from shareholders at a higher price. Owning stock comes with voting rights.
Musk noted in a tweet over the weekend that “the Twitter board collectively owns almost no shares!” with Dorsey leaving the board this year and “their economic interests are simply not aligned with shareholders.”
How would Musk pay for Twitter?
With a net worth of $264.9 billion, Musk is reportedly the richest person in the world, but questions still linger about how he would pay for Twitter.
The Wall Street Journal notes that Musk could sell his stakes in Tesla or SpaceX or borrow money using his stake in those companies as collateral. Both of those options aren’t financially ideal.
In a, Musk said, “I have sufficient assets…” before switching thoughts.
What happens if Twitter rejects the offer?
Musk made it clear in his letter to Taylor that if Twitter rejects the offer, he would reconsider his position as a shareholder in the company.
Mogharabi said in his note that the rejection could drive down the price of Twitter’s stock. Musk has also floated the idea of creating a new social media platform.
“If Musk’s offer is rejected, he could still attempt to raise the capital necessary to create a similar social media platform to compete with Twitter, although attracting millions of daily active users, as Twitter had at the end of 2021, would be a tough task,” Mogharabi wrote in a note.
Musk said in Thursday’s TED Talk he has a “plan B” if his offer is rejected but didn’t say what it is.