on Monday the 25th April, 2022 the independent board chairman Bret Taylor announced the sale of twitter to Elon musk. He tweeted that ” the Twitter Board has reached an agreement with @ElonMusk“. Reacting to the development, Parag Agrawal twitted “Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.”
On April 13, 2022, Elon musk made “a non-binding proposal to acquire all of the outstanding common stock of twitter at $54.20 per share”. The offer was confirmed by Elon musk’s “ I made an offer” tweet and a filling with united states
securities and exchange commission. According to the filling, the offer price represents a 54% premium over the closing price of twitter shares on January 28, 2022, the trading day before Elon Musk began investing in Twitter. It is also, a 38% premium over the closing price of Twitter shares on April 1, 2022, the trading day before Elon Musk publicly announced his investment in Twitter.
Twitter’s “poison pill”
Following Elon Musk’s “unsolicited, non-binding proposal” to acquire twitter, the Twitter Board announced the “poison pill” on April 15, 2022. The plan is called the “limited duration shareholder rights plan”. Following this plan, shareholders will be prevented from owning more than 15% stake in the company. This move was a direct counter attack to musk offer.
Financing the acquisition
To finance the proposed deal, Musk would borrow $25.5 billion from various lenders led by Morgan Stanley. Part of the borrowing will be secured by his stakes in tesla and other companies. Musk on the other hand would provide equity contribution approximately $21 billion.
Under the terms of the agreement, twitter shareholders will receive $54.20 in cash for each share when the transaction is closed. However, the deal is currently pending approval by the shareholders and the government. the deal is worth approximately $44 billion. It will be the highest social media acquisition following the acquisition of LinkedIn for $26.2 billion by Microsoft.