Elon Musk strikes deal to buy Twitter for $44bn
By Natalie
Sherman & Daniel Thomas
Business
reporter, New York
https://www.bbc.com/news/business-61222470
Published 6
hours ago
The board
of Twitter has agreed to a $44bn (£34.5bn) takeover offer from the billionaire
Elon Musk.
Mr Musk,
who made the shock bid less than two weeks ago, said Twitter had
"tremendous potential" that he would unlock.
He also
called for a series of changes from relaxing its content restrictions to
eradicating fake accounts.
The firm
initially rebuffed Mr Musk's bid, but it will now ask shareholders to vote to
approve the deal.
Mr Musk is
the world's richest person, according to Forbes magazine, with an estimated net
worth of $273.6bn mostly due to his shareholding in electric vehicle maker
Tesla which he runs. He also leads the aerospace firm SpaceX.
Why Elon
Musk has been so keen to buy Twitter
"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," Mr
Musk said in a statement announcing the deal.
"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," he added.
"Twitter
has tremendous potential - I look forward to working with the company and the
community of users to unlock it."
The move
comes as Twitter faces growing pressure from politicians and regulators over
the content that appears on its platform. It has drawn critics from left and
right over its efforts to mediate misinformation on the platform.
In one of
its most high-profile moves, last year it banned former US President Donald
Trump, perhaps its most powerful user, citing the risk of "incitement of
violence".
At the time
Mr Musk observed: "A lot of people are going to be super unhappy with West
Coast high tech as the de facto arbiter of free speech."
News of the
takeover has been cheered by the right in the US, although Mr Trump on Monday
told Fox News he had no plans to re-join the platform.
The man who sent his sports car into space
The White
House declined to comment on the takeover but spokesperson Jen Psaki told
reporters: "No matter who owns or runs Twitter, the president has long
been concerned about the power of large social media platforms."
On Twitter,
MP Julian Knight, chairman of the UK's Digital, Culture, Media and Sport
Committee, called the deal an "extraordinary development in the world of
social media".
"It
will be interesting to see how a privately owned Twitter (run by a man who is
an absolutist over free speech) will react to global moves to regulate."
Mr Musk,
who has more than 80 million followers on Twitter, has a controversial history
on the platform himself.
In 2018 US
financial regulators accused him of misleading Tesla investors with his tweets,
claims that were resolved in a $40 million settlement and that Mr Musk
continues to deny.
And in 2019
he was hit with a defamation suit - which he successfully defeated - after
calling a diver involved in rescuing schoolboys in Thailand "pedo
guy" on the platform.
On Monday,
Mr Musk, who has been known to clash with journalists and block critics,
suggested that he saw Twitter as a forum for debate.
"I
hope that even my worst critics remain on Twitter, because that is what free
speech means," he wrote just hours before the deal was announced.
Can Musk turn Twitter around?
As part of
the takeover, which is expected to close later this year, Twitter's shares will
be delisted and it will be taken private.
Mr Musk has
suggested this will give him freedom to make the changes he wants to the
business.
Among other
ideas, he has suggested allowing longer posts and introducing the ability to
edit them after they have been published.
Twitter
shares on Monday closed more than 5% higher after the deal was announced.
But the
price remained lower than Mr Musk's $54.20 per share offer, a sign that Wall
Street believes he is overpaying for the firm.
Mr Musk has
said he doesn't "care about the economics" of the purchase. However,
he will take on a company with a chequered record of financial performance.
Despite its
influence, Twitter has rarely turned a profit and user growth, particularly in
the US, has slowed.
The
company, founded in 2004, ended 2021 with $5bn in revenue and 217 million daily
users globally - a fraction of the figures claimed by other platforms such as
Facebook.
Bret
Taylor, chair of Twitter's board, said it had fully assessed Mr Musk's offer
and it was "the best path forward for Twitter's stockholders".
Parag
Agrawal succeeded Twitter co-founder Jack Dorsey in November
It is not
clear who will lead the company moving forward. Twitter is currently led by
Parag Agrawal, who took over from co-founder and former boss Jack Dorsey last
November.
But in his
offer document, Mr Musk told Twitter's board: "I don't have confidence in
management."
Mr Agrawal
told employees on Monday that the future of Twitter is uncertain.
"Once
the deal closes, we don't know which direction the platform will go," he
said, according to the Reuters news agency.
How did the
deal come together?
Mr Musk's
targeting of Twitter has moved at remarkable speed. It emerged at the beginning
of April that he had become the largest shareholder in the firm with a 9.2%
stake.
He was then
invited to join Twitter's board but turned down the offer before launching a
surprise bid for the company on 14 April, saying he wanted to
"unlock" its potential as a bastion of freedom of speech.
Twitter
tried to fend off his bid, threatening to dilute the shareholdings of anyone
who bought more than a 15% stake in the firm. However, its stance shifted after
Mr Musk revealed more financial details about his proposed bid.
He has
secured $25.5bn of financing for the deal and will take a $21bn stake in the
business.
The board
unanimously approved the bid, which will now be presented to shareholders for a
vote.
Analysis box by James Clayton, North America
technology reporter
Elon Musk: Twitter's new king
The speed
this move has happened at had many heads in Silicon Valley spinning.
From
nowhere, Elon Musk is the absolute monarch of Twitter.
He himself
has said it's not about the "economics", this is about power and
influence.
By taking
the company private he will exercise total control over Twitter.
He has the
power to do with the company as he pleases. In practice that will mean a much
lighter moderation policy.
He also
says that he will make its algorithm public - so that people can better
understand how Twitter works.
The move
leaves the door open to Donald Trump's return to the platform, though he
apparently says he would rather use his own social media platform Truth Social
for now.
For years
conservatives have argued that Twitter is biased against them - and the news
has left Republicans in the US delighted.
Others have
been left dismayed at what Twitter might look like without strong platform
moderation.
You only
need to look at how much criticism Facebook has received for not taking down
groups linked to the QAnon conspiracy theory, or the Stop the Steal movement to
imagine how much criticism Elon Musk is in store for.
The danger
that Twitter now faces is that unfettered free speech on social media can
become very ugly, very quickly.
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