Elon Musk Buys San Francisco-Based Twitter for $44B
Elon Musk has officially bought Twitter, the social media company’s board announced Monday.
Musk, CEO of SpaceX and Tesla, offered $44 billion to purchase the company and make it private.
But what exactly does this all mean? How will Twitter change and how will users be affected?
We answered some of those questions below.
Why Did Elon Musk Buy Twitter?
Musk has been open about his ideas and plans for the future. When he announced the $44 billion deal he said he wanted “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.”
What Was the Process to Buy Twitter?
The announcement came after weeks-long conversations Musk kicked off when he disclosed a large stake in the company. When the company said Musk would join the board, he reversed course on that plan and offered to buy the company at $54.20 per share.
What Happens Next?
As is customary once a company agrees to be acquired, the buyer gets to take a closer look at its books to make sure there aren’t any red flags that have come up via the company’s public filings.
This step in the process isn’t likely to cause any obstacles for the deal, said Angelo Zino, tech analyst at CFRA.
“He’s acquiring this company, not from a financial perspective,” Zino said. “He’s going to do what he wants with it, and he’s probably going to look to make significant changes to the business model of the company.”
What Say Could Regulators Have?
Last year, Twitter generated $5 billion in revenue, with $2.8 billion from the U.S. and the rest earned overseas, Zino said. The Federal Trade Commission in the U.S., or the European Commission in the EU, are among regulatory agencies that may review the proposed Twitter buyout.
The main issues the agencies generally focus on are how the sale of a company could affect competition in an industry, or whether it violates antitrust laws.
These reviews can take months, or longer, but generally represent more of a potential hurdle when two companies in the same industry are combining, or in the case of a single buyer, whether ownership already has a large stake in companies within the same industry.
When Do Shareholders Get to Vote?
The deal is expected to close in 2022, subject to the approval of Twitter shareholders. Twitter hasn’t announced the timing of a shareholder vote, though the company’s annual meeting is set for May 25, which could offer a convenient time to poll shareholders.
A company can elect to hold a shareholder vote at any time, even before regulators have finished reviewing a proposed takeover.
How Will Twitter Change?
We’ll have to wait for official details on whether the social media platform will make any changes following the deal, but Musk has said his interest in Twitter comes from the company’s censorship of free speech.
In a statement, Musk said, “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.”
Concern About Future Changes to Twitter
Critics are concerned that Musk’s control over Twitter will result in silencing of those who may disagree with him.
White House officials and advisers to President Joe Biden worry Musk will allow Trump and others who were banned from Twitter to return to the platform.
“Now, Trump will use Twitter to do far more damage to regain power in 2022 and 2024 while Elon Musk has given no indication that he will do anything to stop him,” Mary Anne Marsh, a veteran Democratic strategist said.
What About Twitter’s San Francisco Headquarters?
Twitter’s corporate headquarters is located on Market Street in San Francisco.
Musk announced in October that he’d be moving Tesla to Austin, Texas, from its headquarters in Palo Alto, following in the footsteps of other tech leaders leaving California.
So could a move outside of California be in Twitter’s future? The answer is unclear at this point.
Texas Gov. Greg Abbott, however, took to Twitter to invite Musk to move the social media company to his state.