Twitter finally agrees to sell to Elon Musk for US$44bn

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Twitter has agreed to sell the company to Tesla chief Elon Musk for US$44 billion cash and the deal is expected to close later this year. This comes after Musk proposed to buy the social media company over the Easter weekend for US$54.20 per share. Twitter CEO Parag Agrawal said during a meeting on 25 April that there will be no job cuts at the moment but Twitter is freezing all hiring activities until the deal is done.

Musk has been vocal about wanting to turn Twitter into a platform that strongly supports free speech. After news of the sale broke, Musk said in a statement that free speech is "the bedrock of a functioning democracy" and he described Twitter to be the "digital town square" where matters important to humanity's future are discussed.

Separately, other changes Musk previously said he would make to Twitter include softening the platform's stance on content moderation, shifting its business model to focus more on subscriptions, including an edit button for tweets, providing authentication checkmarks to users who pay for subscription service Twitter Blue, and taking the social media company private, The Wall Street Journal reported.

Meanwhile, Agrawal said during the Monday meeting that this will be Musk's choice and that the company makes decisions "for the health of the public conversation" on a daily basis. Agrawal, however, does not know which direction the platform will head toward once the deal closes. Twitter's board would cease to exist after the deal is closed, Twitter chairman Bret Taylor, who was also present during the Monday meeting, said, according to Bloomberg.

However, while touted as a battle over "free speech", this acquisition is in fact a battle around "content moderation", said Mike Proulx, VP, research director, Forrester. "This leads to questions on whether Musk would address disinformation and hate speech on Twitter or enable it to further amplify in the name of “free speech," he added.

Forrester's principal analyst Kelsey Chickering also added that Twitter ad dollars will be at risk should Musk decide to loosen the platform's content moderation policies. "Brands are becoming more conscious of their adjacency to risky content or disinformation, so they may take their dollars to other channels with greater safety measures in place," he said.

Twitter had previously resisted the sale to Musk by adopting a limited duration shareholder rights plan. The rights plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the board sufficient time to make informed judgments and take actions that are in the best interests of shareholders. While Twitter was fighting off Musk, media outlets including Reuters reported that private equity firms including Thoma Bravo expressed interest in acquiring Twitter.

Before bidding for Twitter, Musk stirred up much chatter online when it was announced that he will be joining Twitter's board earlier this month. Shortly after, it was revealed that Musk would not be joining Twitter's board after all and Agrawal tweeted previously that he believes "this is for the best". Thereafter, Musk was sued by ex-Twitter shareholders for failing to disclose this stake in the company at the time of required action. The lawsuit stated that Musk did not disclose his 9.2% stake until 4 April. When he finally did, the company's shares rose from a closing price of US$39.31 per share on 1 April to close at US$49.97 per share on 4 April, an increase of about 27%.

As a result, investors who sold shares of Twitter stock between 24 March, when Musk was required to have disclosed his Twitter ownership, and before the actual 4 April disclosure, missed the resulting share price increase as the market reacted to Musk's purchases. By failing to disclose his ownership stake, the lawsuit alleged that Musk was able to acquire shares of Twitter less expensively during the class period.

Meanwhile, on the advertising front, Twitter recently banned misleading ads that would detract from important conversations around the climate crisis. “We recognise that misleading information about climate change can undermine efforts to protect the planet. In the coming months, we’ll have more to share on our work to add reliable, authoritative context to the climate conversations happening on Twitter,” it said in a blog post.

Twitter also added that tracking the climate crisis “requires meaningful, sustained collaboration”. Through #AdsForGood grants, on-service support, trainings, it is partnering with organisations committed to environmental conservation and sustainability.

Photo courtesy: 123RF

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