Elon Musk, the CEO of Tesla, Inc. (TSLA), has made an unsolicited $43 billion bid to take Twitter, Inc. (TWTR) private. In a filing with the U.S. Securities and Exchange Commission (SEC), Musk indicates that he proposes to pay $54.20 in cash per share. After closing at $45.85 on April 13, 2022, Twitter initially surged to around $50 in pre-market trading before the open on April 14, then settled back to about $48.
Musk disclosed a roughly 9% stake in Twitter on April 4. Twitter indicates that its board of directors will review the proposal and make a response that is in the best interests of "all Twitter stockholders."
- Elon Musk has made a $43 billion cash bid to acquire all shares of Twitter (TWTR) and take it private.
- Musk already has a stake of about 9% in Twitter.
- Whether he can raise the cash and whether Twitter will accept his offer are open questions.
- Musk has been critical of Twitter on various issues, mainly censorship.
Musk vs. Twitter
Musk has been a very active user of Twitter, with over 80 million followers. He also been vocal about changes that he wants to see at Twitter, which offered him a board seat after his stake was revealed.
In particular, Musk has criticized Twitter about its exercise of censorship. In a letter to Twitter's board that presents details about his offer, Musk said that Twitter: "will neither thrive nor serve [its free speech] societal imperative in its current form. Twitter needs to be transformed as a private company."
Musk also stated: "If the deal doesn't work, given that I don't have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder."
Raising the Cash
With an estimated net worth of about $260 billion, Musk has more than sufficient personal resources to acquire Twitter, which has a market capitalization of about $37 billion. However, much of his wealth is tied up in Tesla stock. As a result, he probably will have to sell Tesla shares or borrow to raise the $43 billion that he is bidding for Twitter.
Moreover, given that Twitter has traded over $70 in the past 52 weeks, it is possible that its board will consider Musk's offer of $54.20 to be too low.