Elon Musk's takeover of Twitter is actually happening. Twitter and Musk announced the deal, which is valued at $54.20 a share, on Monday. The move comes after a weekend of negotiations between Twitter and Musk, who had just gotten the funding needed to buy the company last week.
The deal, worth about $44 billion, adheres to the price Musk had originally set and told Twitter he would not change his mind on.
"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," 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. Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it."
At the beginning of the month, news that Musk was seeking to buy Twitter — and that Twitter would entertain his bid — would be a shocker. This whole adventure began with Musk buying a huge stake in the company — violating SEC disclosure rules along the way — and considering a seat on Twitter's board. The board seat thing didn't pan out, which we now know is because Musk didn't just want a seat at the table: He wanted the whole company. Twitter reportedly became more open to Musk’s bid in recent days.
"The Twitter Board conducted a thoughtful and comprehensive process to assess Elon's proposal with a deliberate focus on value, certainty, and financing," Twitter board chair Bret Taylor said in the deal announcement. "The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders."
Twitter employees are expected to gather for an all-hands meeting today to discuss the deal. "I know this is a significant change and you're likely processing what this means for you and Twitter's future," Twitter CEO Parag Agrawal said in a memo to workers.
Twitter (except for maybe the company's former leader) seemed resistant to Musk's bid. The company had prepared a so-called poison pill, which makes it harder for someone to purchase a company, and a number of Twitter employees have been vocally outraged since the moment Musk thought about joining the company's board. On the other hand, some Republicans welcomed Musk's bid, seeing it as an opportunity to move closer to Musk's ideas to make Twitter more "free speech"-friendly and switch to an open-source algorithm, which they saw as limiting Twitter’s enforcement of policies they deem unfriendly or disadvantageous to them.
What happens now? We may learn much more from Twitter itself on Thursday, when the company reports earnings, though the company said it will not hold a corresponding earnings call. On May 25, Twitter will also hold its annual meeting, during which shareholders will vote on whether to change the board structure to let directors serve for one-year instead of three-year terms (which would make a future takeover a lot easier, though not right away). Musk has suggested he wanted to let some Twitter shareholders retain a stake after he gains control, though it’s not clear how that structure would work alongside a more conventional takeover bid.
The deal will close this year, subject to approval from shareholders and standard regulatory approval.