Billionaire entrepreneur Elon Musk has agreed to buy Twitter Inc. for $44 billion. Musk is the developer of SpaceX, Tesla, SolarCity, and many other significant corporations. He began amassing a 9% stake in the company in January. Since its first public offering in 2013, Twitter has been a publicly traded corporation. Twitter has become a lightning rod for controversy in recent years.
Some users have propagated disinformation and other poisonous content on the platform. In addition to its speech issues, Twitter is being questioned regarding its economic practices. For years, the company has struggled to attract new customers and retain existing ones.
What do we know?
Musk stated in his initial bid for Twitter that he would not change his mind about the $54.20 per share price. He kept his word, announcing an all-cash deal for that precise amount. It’s a massive leveraged buyout. This may seem self-evident, yet Twitter has decided to sell itself to a Musk-controlled corporation. Goldman Sachs Group Inc. and JPMorgan Chase & Co. were already known to be collaborating with Twitter. According to Monday’s statement, Allen & Co. joined that camp. The statement from Monday didn’t say whether either party had agreed to pay a termination fee if the deal falls through.
What we don’t?
While Musk’s announcement stated that he is “making an approximately $21 billion equity investment,” there was no additional information regarding where the money will come from. Both CEO Parag Agrawal and Chairman Bret Taylor were quoted in the statement, thus they remain in their positions for the time being. Musk has spoken openly about his intentions to turn the site into a haven for uncensored online expression, and he has complained that the service is too strict in its moderation of user tweets. Many of these issues should be addressed in a Form 8-K filing that Twitter is required to file with the Securities and Exchange Commission. In the midst of all of this, Twitter is set to release its latest earnings report on Thursday morning, before the market opens.
Is it possible for Musk to turn Twitter around?
As part of the takeover, Twitter’s shares will be delisted and the company will be taken private, which is scheduled to close later this year. Mr. Musk claims that this will allow him to implement the corporate reforms that he desires. He has proposed, among other things, enabling longer posts and allowing users to amend them after they have been published.
It’s unclear who will be in charge of the company in the future. The current CEO of Twitter is Parag Agrawal, who took over from co-founder and former CEO Jack Dorsey in November. On the other hand, Mr. Musk stated in his offer document to Twitter’s board of directors, “I don’t have faith in management.”
On Monday, Mr. Agrawal reminded Twitter staff that the company’s future is uncertain. According to the Reuters news agency, “We don’t know which route the platform will take once the sale happens,” Parag Agrawal said, according to Reuters.
Changes to Twitter are on the way.
In a recent TED talk, Musk remarked that he’d want to see Twitter err on the side of permitting expression rather than controlling it. He added he’d be “extremely hesitant” to remove tweets and would be wary of permanent bans in general. Musk described having “tweets strangely promoted and demoted” and a “black-box system” as “very risky.” He also admitted that Twitter will have to follow national rules governing free speech in markets all across the world.
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