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Shares of Twitter Inc. soared Thursday, after the social-media platform’s largest shareholder, Elon Musk, disclosed a bid to buy the remainder of the San Francisco–based company’s stock that he doesn’t already own so he can transform it into the world’s “platform for free speech.”
Musk, the “technoking” of Tesla Inc. and founder of SpaceX, also indicated that if his “best and final” bid isn’t accepted, he might sell off his stake.
In a 13D/A filing with the Securities and Exchange Commission, it was disclosed that Musk delivered a letter to Twitter on April 13 that contained a “nonbinding proposal” to buy all of Twitter’s outstanding stock
TWTR,
that he doesn’t own for $54.20 a share, which represents an 18.2% premium to Wednesday’s closing price of $45.85.
The bid also represents a 53.7% premium to the $35.27 closing price on Jan. 28, which was the trading session before Musk starting buying Twitter shares.
“Twitter has extraordinary potential,” Musk said. “I will unlock it.”
With 800.64 million shares outstanding as of Feb. 10, Musk’s bid would value Twitter at about $43.39 billion.
Twitter said it would “carefully review” Musk’s “unsolicited” bid and determine what it believes would be in the best interest of the company and its shareholders.
Twitter’s stock ran up 11% in premarket trading, while Tesla’s stock
TSLA,
fell 0.9%.
Musk had disclosed in early April that he had spent $2.64 billion to buy 73.12 million shares of Twitter, or 9.1% of the shares outstanding, to become Twitter’s largest shareholder. Twitter than said it had named Elon Musk to its board of directors, only to have Musk confirm later that he wouldn’t join the board after all and could instead engage with the company without limitation.
In Musk’s letter to Twitter’s chairman, Bret Taylor, he explained his decision to buy the company: “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Musk said that he would not play a “back-and-forth game” and that his $54.20-per-share bid is his “best and final offer.”
“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,” Musk said.
He claimed that was “not a threat,” just an acknowledgment that Twitter is “simply not a good investment” without the changes that, in his stated view, need to be made.
Twitter’s stock has gained 6.1% over the past three months through Wednesday but has tumbled 34.3% over the past 12 months. In comparison, the S&P 500 index
SPX,
has advanced 7.8% over the past year.
