Elon Musk and Twitter Logo

Elon Musk Reaches Deal to Buy Twitter

Elon Musk has offered a deal to buy Twitter for $44 billion. Twitter’s board of directors have all agreed to his offer to purchase the social media platform. Musk, one of the richest people in the world, uses Twitter frequently and has often complained about how the company has moderated content on the site.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.”

Musk May Buy Twitter

Earlier this month, it was announced that Musk had acquired a 9.2 percent stake in Twitter, which made him one of the biggest shareholders in the company. As a large shareholder, Musk and the company have been in a head-to-head battle about the future of Twitter. At one point, Musk agreed to join the board but later announced an acquisition offer. Twitter then used a corporate move called a “poison pill” to stop him from purchasing the social media platform. The “pill” is a shareholder rights plan that could stop Musk from buying more than 15 percent of shares by lowering the value of his holdings.

However, on April 20, Musk filed a securities document proving he has financing agreements worth $46.5 billion from a group of banks. This may have pressured Twitter’s board to consider his offer more seriously. 

Still, some remain hopeful about Musk’s acquisition. Lauri Brunner, senior portfolio manager for financial services group Thrivent, which holds about $160 million worth of Twitter shares, said that Musk should do well with Twitter seeing his history at Tesla. Thrivent also holds shares for Tesla. “I think that Elon is very transparent about his plans and his strategy,” Brunner said. [1]

Read: Elon Musk Says He Hopes to Start Putting Brain Chips in Humans Next Year

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If the Deal Goes Through…

If Musk’s offer is accepted, Twitter stockholders will receive $54.20 in cash for each share of common stock, a 38 percent premium to the closing stock price on the first of this month and right before Musk announced his 9.2 percent stake in the company. “The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing,” said board chair Bret Taylor in a statement. “The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”

After the news of this deal surfaced, shares went up about 6%. The board has approved this transaction, which is now waiting for a vote from the shareholders. In a statement, the company said that Musk has secured $25.5 billion in debt and margin loan financing. He will give a $21 billion equity commitment. However, the breakup fee is unknown. Plus, it’s unclear who will run the company moving forward.

Twitter remains relatively small compared to other social media sites like Facebook. Still, it has become an unmistakable platform for politicians, activists, and political disputes. It was also accused of being a player in the storming of the U.S. Capitol on January 6, 2021. After this event, Twitter banned former President Donald Trump from the site, claiming he may incite violence from his followers. In response, Musk tweeted, “A lot of people are going to be super unhappy with West Coast high tech as the de facto arbiter of free speech.”

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Why is Musk Buying Twitter?

As previously mentioned, Musk has criticized Twitter, particularly its “failure to adhere to free speech principles,” saying it “fundamentally undermines democracy.” Therefore, he plans to “increase trust” and promote free speech on the platform. Plus, he wants to fight the many trolls on Twitter and change the Twitter Blue premium subscription service, including lowering the price and stopping advertising.

“He wants to protect freedom of speech. … It has been a fundamental part of the American spirit,” said Mariam Humayun, an assistant professor of marketing at the University of Ottawa’s Telfer School of Management.

“Corporations are investing a ton of money into media companies. There is this movement where corporations know that whoever controls the eyeball is going to have a lot of power.”

However, the future of Twitter remains unclear, as is Musk’s conception of free speech. According to Alfred Hermida, a professor at the University of British Columbia, Twitter currently runs like a public town square. “If we take Musk’s free speech as absolutist, then Twitter will become a free-for-all space, still bound by the legal systems a country operates from, but a place where people are shouting at each other isn’t valuable.”

These changes in moderation will also be accompanied by a new open-source and more transparent algorithm. David Tindall, also a professor at UBC and an expert on social media and social movements, is optimistic about these changes. He believes these could really improve Twitter — potentially. “It partly depends on whether he’s willing to surround himself with experts with broader knowledge than he has and if he’s willing to listen to them, or whether he just wants to do his own thing,” Prof. Tindall said. [2]

Still, everyone has their own opinion on what this acquisition might mean. After all, this is Twitter; of course, everyone has an opinion. Including Jack Dorsey, the co-founder and former CEO of Twitter. In a series of tweets, he explained that “Twitter is the closest thing we have to a global consciousness.”  About the company going public in 2013, he commented, “it has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step.”

In this vein, he expresses hope about Twitter under Musk’s control. “In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company, however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”

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Will Trump Return to Twitter?

As Musk buys out the social media platform, people bet on whether Trump will be reinstated. However, Trump’s company is creating a rival site called Truth Social. Plus, Trump has stated that he won’t return to the original platform. [3] Still, a change in Twitter may end Truth Social.

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“Twitter becoming open to a bigger variety of voices is likely to the be last nail in the coffin of Truth Social’s SPAC,” said Max Gokhman, chief investment officer at money manager AlphaTrAI Inc. “It’s hard to see any upside for them given all of the internal struggles with even launching a scalable social platform and now the likelihood that Twitter will allow a broader range of discourse.”

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However, Devin Nunes, chief executive officer of Trump Media & Technology Group, has shown favor for Musk’s acquisition. He doesn’t see Twitter as a threat. “Twitter is a global PR wire, it’s not a community like what we’re trying to build,” he said. “There’s just not that many people on Twitter, quite frankly.”

Meanwhile, Sarah Mostafa, a Digital World Acquisition Corp investor, said Musk’s purchase could “definitely be a threat” to Truth Social. A new version of Twitter “will be very competitive with DWAC if he actually makes changes to purify Twitter of its poor policies”. Digital World Acquisition Corp., is a special purpose acquisition company trying to merge with Trump Media & Technology Group. [4]

In the meantime, investors and social media users wait and see if Musk’s acquisition will go through. And what he’ll do with the platform moving forward.

Keep Reading: ‘WOKE MIND VIRUS’: Elon Musk says Netflix is ‘unwatchable’ as platform’s shares nosedive

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Sources:

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  1. Jason Abbruzzese and Rob Wile. “Elon Musk reaches deal to buy Twitter.” NBC News. April 25, 2022
  2. Mahdis Habibinia. “Why is Elon Musk buying Twitter? What you need to know about the $44-billion deal.” The Globe and Mail. April 25, 2022
  3. Greg Roumeliotis. “Elon Musk taking Twitter private in $44 billion deal.” Reuters. April 25, 2022
  4. Claire Ballentine and Sophie Alexander. “Twitter Under Elon Musk Threatens to End Trump’s Truth Social Media Venture.” Bloomberg. April 25, 2022

Editors Note (04/27/2022): This article has bs been updated with new information and insight as to why Elon Musk has purchased Twitter.

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Sarah Biren
Freelance Writer
Sarah is a baker, cook, author, and blogger living in Toronto. She believes that food is the best method of healing and a classic way of bringing people together. In her spare time, Sarah does yoga, reads cookbooks, writes stories, and finds ways to make any type of food in her blender.
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