Elon Musk spreads on Twitter with a cash offer of $ 41 billion

Elon Musk speaks at the World Auto News Conference at the Renaissance Center in Detroit, Michigan, January 13, 2015. REUTERS/Rebecca Cook

April 14 (Reuters) – Elon Musk has targeted Twitter (TWTR.N) With a cash offer of $41 billion on Thursday, sending shares of the social media giant soaring, which the Tesla CEO said needed to become private to grow and become a platform for free speech.

“Twitter has extraordinary potential. I’m going to open it up,” Musk said in a letter to Twitter’s board of directors on Wednesday, which was published in a regulatory filing on Thursday.

Musk’s offer price of $54.20 per share represents a 38% premium to Twitter closing April 1, the last trading day before Tesla (TSLA.O) The CEO’s stake of over 9% in the social media platform has been announced.

The billionaire turned down an offer to join Twitter’s board this week after his stake was revealed, a move analysts said indicated his intent to take over the company because a board seat would have limited his stake to less than 15%. Read more

“Since I made my investment, I now realize that the company will not thrive and will not serve this societal imperative in its current form. Twitter needs to transform into a private company,” Musk said in his letter to Twitter Chairman Brett Taylor.

Musk, who calls himself an absolute freedom-of-speech, has criticized the social media platform and its policies, and recently conducted a Twitter poll asking users if they think it adheres to the principle of free speech.

“My offer is my final best offer, and if it is not accepted, I will need to reconsider my position as a shareholder,” Musk added.

A source told Reuters that Twitter will review the offer with advice from Goldman Sachs, Wilson Soncini Goodrich and Rosati.

Twitter shares jumped 12% in initial trading, while Tesla shares fell about 1%. Based on Twitter’s closing price on Wednesday of $45.85, its price in pre-market trading in New York implies that the company accepts Musk’s offer at 35%.

According to Refinitiv data, the total value of the deal of $41 billion was calculated on the basis of 763.58 million shares outstanding.

Musk said US investment bank Morgan Stanley was working as a financial advisor for his presentation. He did not say how he would finance the deal if it were implemented.

“slow series”

“The big question on Twitter’s board now is whether to accept a very generous offer for a company that has been sequentially underperforming and tending to treat its users carelessly,” Michael Hewson, chief market analyst at CMC Markets, said after the announcement. From Musk Show.

Musk has amassed more than 80 million followers since joining Twitter in 2009 and has used it to make several announcements, including teasing a special deal for Tesla that got him in trouble with regulators.

He has also been sued by former Twitter shareholders who claim they missed the recent surge in his share price because he waited too long to reveal his stake. Read more

Less-than-expected Twitter user additions in recent months have cast doubt on its growth prospects, even as it pursues big projects like voice chat rooms and newsletters.

“It will be difficult for any of the other bidders/consortium to emerge, and will likely force the Twitter board to accept this offer and/or operate an active Twitter sale,” Daniel Ives, an analyst at Wedbush Securities, wrote in a client note.

“There will be a host of questions about financing, regulation, and balancing Musk’s time (Tesla and SpaceX) in the coming days, but based on that submission, it’s now an offer for Twitter or never to accept it,” Ives said.

(Report) Submitted by Shafi Mehta, Uday Sampath and Greg Rumiliotis; Editing by Anil de Silva and Alexander Smith

Our criteria: Thomson Reuters Trust Principles.