Twitter: Will Elon Musk actually buy social media platform for $44bn?

Tesla boss has already been accused of ‘bullying’ staff at platform in tweets

Graeme Massie
Los Angeles
Thursday 28 April 2022 21:23
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Tesla Stock Falls Over 11% After Elon Musk Buys Twitter

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Elon Musk has become the world’s richest person, and one of the business world’s most polarising figures on the back of the staggering commercial success of Tesla and engineering brilliance of SpaceX.

And with his $44bn offer for Twitter having been accepted by the social media’s platform’s board, Mr Musk will presumably add a third CEO role to his collection.

With the Twitter board’s unanimous support for his $54.20 cash offer per share to take control of the company and take it private, Mr Musk’s takeover should face little resistance.

Shareholders will receive a tender offer in the coming weeks, and if a majority agree, the deal will be done.

Federal anti-trust regulators are likely to take a look at the deal because of its size, but are unlikely to sue to block it, former officials told The New York Times.

Twitter and Mr Musk will have to submit the deal for review by the Justice Department and Federal Trade Commission, but the government usually only gets involved when one company buys a competitor, which is not the case here.

However, the impact of the proposed deal on the share price of Tesla and Twitter, has come under some scrutiny from market observers.

As of Thursday afternoon, the Tesla share price over the last five days has dropped more than 13 per cent, while the Twitter share price while up 3.14 per cent over the same period, is still well below Mr Musk’s offer of $54.20 per share at around $49.

The MarketWatch website wrote that both elements suggested “that markets see risk that the $44 billion deal might not happen.”

According to an SEC filing on the transaction, Mr Musk will have to pay Twitter $1bn if he pulls out of the deal to buy it, and the company will also owe him the same fee under certain circumstances.

As part of the deal, Mr Musk also agreed to a clause that specifies that he will not disparage Twitter, which his critics say he has already broken.

In the days since his takeover was announced, Mr Musk has responded directly to tweets criticising Twitter executives, such as chief legal officer Vijaya Gadde, and lawyer Jim Baker.

Former Twitter CEO Dick Costolo responded directly to one of Mr Musk’s tweets, accusing him publicly of abusing Ms Gadde.

“What’s going on?  You’re making an executive at the company you just bought the target of harassment and threats,” he tweeted.

And added: “Bullying is not leadership.”

Then there is the issue of Twitter and the European Union, which has just passed strict new Digital Services Act.

Mr Musk has said that he is buying Twitter to make it a bastion of “free speech”, with critics predicting it will mean the return of banned right-wing figures such as Donald Trump and Marjorie Taylor Greene.

Now, under the DSA, large online platforms such as Twitter, Google and Meta, will face heavy financial fines if they do not control illegal content.

The EU’s internal markets chief, Thierry Breton, even took to Twitter to warn Mr Musk that if he buys the platform, he will also need to follow the rules.

“Be it cars or social media, any company operating in Europe needs to comply with our rules – regardless of their shareholding. Mr Musk knows this well,” he tweeted.

“He is familiar with European rules on automotive, and will quickly adapt to the Digital Services Act.”

Mr Musk is well aware of this requirement, telling a TED 2022 audience earlier this month that he believed Twitter “should match the laws of the country (it is in), and really that is our obligation to do that.”

In the SEC filing, Twitter said that the aim was for the company to emerge with Mr Musk’s “X Holdings” by 24 October.

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