Twitter and Elon Musk Strike $44 Billion Deal

The $44 billion deal marks the shut of a dramatic courtship and a change of coronary heart at Twitter, the place many executives and board members initially opposed Mr. Musk’s takeover strategy. The deal has polarized Twitter workers, customers and regulators over the ability tech giants wield in figuring out the parameters of discourse on the web and the way these firms implement their guidelines.

The 2 sides labored by way of the evening to hash out a deal by which Mr. Musk plans to take Twitter personal in a deal that values the corporate at $54.20 a share.

Elon Musk struck a deal on Monday to purchase Twitter for about $44 billion, transferring the world’s richest man a step nearer to taking management of the social-media platform. Photograph: Ryan Lash/TED/AFP/Getty Photos

The takeover, if it goes by way of, would mark one of many greatest acquisitions of a tech firm and can possible have an effect on the course of social media. Mr. Musk will convey a dedication to a extra hands-off strategy on speech moderation to an organization that has struggled to reconcile freewheeling conversations with content material that appeals to advertisers.

On Monday, a day after The Wall Road Journal first reported {that a} deal was shut, Mr. Musk tweeted to point that he desires the platform to be a vacation spot for wide-ranging discourse and disagreement.

“I hope that even my worst critics stay on Twitter, as a result of that’s what free speech means,” he wrote.

Mr. Musk mentioned after the deal was introduced that he desires to make Twitter a greater person expertise, partly by including new options and preventing spam. The billionaire, who can also be chief govt of Tesla Inc. and Area Exploration Applied sciences Corp., has a document of difficult conventions in disparate industries.

Twitter is going through vital enterprise challenges and has already launched into a turnaround plan after a combat with activist investor Elliott Administration Corp. about two years in the past. Twitter mentioned just a little over a 12 months in the past that it aimed to no less than double its income to $7.5 billion by the top of 2023 and attain no less than 315 million so-called monetizable every day lively customers at the moment.

To achieve that latter objective, the corporate would want to sharply improve its person development, which has been within the single-digit proportion factors for many of the previous few years.

Among the many different points Mr. Musk will face is whether or not to permit Donald Trump again on Twitter, after the Republican former president’s private account was “completely suspended” by the corporate final 12 months within the wake of the Jan. 6, 2021, assault on the U.S. Capitol by a mob of his supporters looking for to intervene with the certification of President Biden’s 2020 election win.

Mr. Trump advised Fox Information on Monday that he had no plans to return to Twitter and would as an alternative use his startup Reality Social as his most well-liked social-media community.

At an all-hands worker assembly on Monday afternoon, CEO Parag Agrawal mentioned that there are not any layoffs deliberate and that the corporate’s priorities aren’t altering earlier than the deal closes, in accordance with an individual who heard the remarks. Mr. Agrawal mentioned that when Mr. Musk takes over, “we don’t know what course the corporate might go,” the particular person mentioned.

Mr. Agrawal mentioned Mr. Musk agreed to transform worker stockholdings to money as soon as the deal closes and pay them out on the prevailing vesting schedule, the particular person mentioned.

Bret Taylor, Twitter’s unbiased board chairman, mentioned the deal displays one of the best consequence for shareholders.

The San Francisco-based social-media firm had been anticipated to rebuff the provide, which Mr. Musk made April 14 with out saying how he would pay for it. A day after the unsolicited provide, Twitter adopted a so-called poison tablet, designed to make it tougher for Mr. Musk to achieve greater than a 15% stake within the firm.

Twitter modified its posture after Mr. Musk detailed components of his financing plan for the takeover. On April 21, he mentioned he had $46.5 billion in funding lined up. Twitter shares rose sharply, and firm executives opened the door to negotiations.

Twitter shares rose 5.7% Monday to shut at $51.70 every. The inventory has been an anemic performer in an period of giant returns for know-how firms. Its shares jumped on their first day of buying and selling in 2013 to shut at $44.90, inside a greenback of the place they have been greater than eight years later when Mr. Musk made his strategy.

However since Mr. Musk disclosed a roughly 9% stake within the firm in early April, Twitter shares have climbed 32%. That has pushed Twitter larger on a year-to-date foundation, outpacing different know-how firms and the broader market.

The turnabout on Twitter’s half comes after Mr. Musk met privately Friday with a number of shareholders of the corporate to extol the virtues of his proposal whereas repeating that the board has a “yes-or-no” choice to make, individuals aware of the discussions mentioned.

Mr. Musk, with over 82 million Twitter followers, has lengthy used the platform to pronounce his views on every part from house journey to cryptocurrencies. In January, he started shopping for Twitter inventory, turning into the single-largest particular person investor with a greater than 9% stake by April.

He has beforehand used Twitter to escalate a battle with the Securities and Change Fee after the company opened a probe into a few of his latest inventory gross sales, and he usually blasts his critics on the social community.

Taking Twitter personal would enable Mr. Musk to make modifications with out the scrutiny public firms usually are below from their shareholders. He additionally has mentioned he desires to retain as many shareholders as potential.

Twitter, in the beginning of April, invited Mr. Musk to hitch its board—which might have prevented him from proudly owning greater than 14.9% of the corporate’s inventory. Mr. Musk initially agreed after which rejected the provide.

Mr. Musk’s proposed modifications for the platform embrace softening its stance on content material moderation, creating an edit characteristic for tweets, making Twitter’s algorithm open supply—which might enable individuals outdoors the corporate to view it and recommend modifications—and relying much less on promoting, amongst different concepts.

Mr. Musk, a self-described “free speech absolutist,” mentioned in a latest interview at a TED convention that he sees Twitter because the “de facto city sq..”

Twitter needs to be extra cautious when deciding to take down tweets or completely ban customers’ accounts, Mr. Musk mentioned, pointing to momentary suspensions as a greater answer.

Mr. Musk mentioned he additionally desires the platform to be extra clear when it takes motion that amplifies or reduces a tweet’s attain. He mentioned he wasn’t sure how a few of these concepts can be applied.

Twitter headquarters in San Francisco. There may be wariness amongst workers concerning the proposed takeover.

Photograph: David Paul Morris/Bloomberg Information

Twitter has spent years advocating for what it calls more healthy discourse on its platform and including content material moderation, arguing no less than partly that it’s good for enterprise.

The corporate additionally launched new options which have been gaining some traction with customers, together with Twitter Areas, which permits individuals to host stay audio conversations with each other throughout the platform.

Mr. Musk has mentioned he desires Twitter to rely much less on promoting—which supplied about 90% of its income in 2021—and shift its enterprise mannequin extra towards subscriptions. The platform at the moment affords a subscription-based service known as Twitter Blue, which supplies prospects premium options like “undo tweet” for $2.99 a month. He recommended eradicating all adverts on Twitter as a part of the subscription choices.

Mr. Musk additionally floated the thought of reducing workers, shuttering the corporate’s San Francisco headquarters constructing and never giving the board of administrators a wage. The latter may save about $three million a 12 months alone, he mentioned.

His different proposed modifications for Twitter embrace attempting to cease spam and rip-off bots and permitting for longer tweets. The present restrict is 280 characters.

On Thursday, Twitter is scheduled to announce its first-quarter earnings. The corporate mentioned Monday it now not deliberate to carry a name with analysts that day.

Elon Musk and Twitter

Write to Cara Lombardo at cara.lombardo@wsj.com, Meghan Bobrowsky at Meghan.Bobrowsky@wsj.com and Georgia Wells at georgia.wells+1@wsj.com

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Twitter and Musk Are in Discussions to Strike a Deal

Twitter Inc. TWTR 3.93% is in discussions to promote itself to Elon Musk and will finalize a deal as quickly as this week, individuals acquainted with the matter mentioned, a dramatic flip of occasions simply 10 days after the billionaire unveiled his $43 billion bid for the social-media firm.

The 2 sides met Sunday to debate Mr. Musk’s proposal and had been making progress, although nonetheless had points to hash out, the individuals mentioned. There are not any assure they may attain a deal.

Twitter had been anticipated to rebuff the provide, which Mr. Musk made April 14 with out saying how he would pay for it, and put in place a so-called poison capsule to dam him from growing his stake. However after the Tesla Inc. TSLA -0.37% chief disclosed that he has $46.5 billion in financing and the inventory market swooned, Twitter modified its posture and opened the door to negotiations, The Wall Road Journal reported earlier Sunday.

Mr. Musk has mentioned from the start that his $54.20-a-share provide is his “greatest and last,” and he reiterated to Twitter Chairman Bret Taylor once more in latest days that he gained’t budge on worth, a number of the individuals mentioned. The conversations between the 2 sides had been anticipated to concentrate on points together with what Mr. Musk would pay ought to an agreed deal disintegrate earlier than being consummated.

Twitter is slated to report first-quarter earnings Thursday and had been anticipated to weigh in on the bid then, if not sooner.

The potential turnabout on Twitter’s half comes after Mr. Musk met privately Friday with a number of shareholders of the corporate to extol the virtues of his proposal whereas repeating that the board has a “yes-or-no” choice to make, in accordance with individuals acquainted with the matter. He additionally pledged to resolve the free-speech points he sees as plaguing the platform and the nation extra broadly, whether or not his bid succeeds or not, they mentioned.

Mr. Musk made his pitch to pick shareholders in a sequence of video calls, with a concentrate on actively managed funds, the individuals mentioned, in hopes that they may sway the corporate’s choice.

Mr. Musk mentioned he sees no approach Twitter administration can get the inventory to his provide worth by itself, given the problems within the enterprise and a persistent incapability to right them. It couldn’t be discovered if he detailed particular steps he would take, although he has tweeted about wanting to scale back the platform’s reliance on promoting, in addition to to make less complicated adjustments akin to permitting longer tweets.

Elon Musk already has mentioned he’s contemplating taking his bid on to shareholders by launching a young provide.

Photograph: Miguel Roberts/The Brownsville Herald/Related Press

Some shareholders rallied behind him following the conferences. Lauri Brunner, who manages Thrivent Asset Administration LLC’s large-cap development fund, sees Mr. Musk as a talented operator. “He has a longtime observe document at Tesla,” she mentioned. “He’s the catalyst to ship sturdy working efficiency at Twitter.” Minneapolis-based Thrivent has a roughly 0.4% stake in Twitter value $160 million and can be a Tesla shareholder.

Mr. Musk already has mentioned he’s contemplating taking his bid on to shareholders by launching a young provide. Even when he was to get important shareholder assist in a young provide—which is much from assured—he would nonetheless want a approach across the firm’s poison capsule, a authorized maneuver it employed that successfully blocks him from constructing his stake to 15% or extra.

One oft-employed tactic to push a bid, looking for to achieve management of the goal’s board, is out of attain for now. Twitter’s administrators have staggered phrases, which means a dissident shareholder would wish a number of years to achieve management fairly than a single shareholder vote. Twitter tried final 12 months to part out the staggered board phrases on condition that they’re frowned upon by the corporate-governance neighborhood, however not sufficient shareholders voted on the measure. The corporate is making an attempt to take action once more at this 12 months’s annual assembly set for Might 25. Solely two administrators are up for re-election, and it’s too late for Mr. Musk to appoint his personal.

As Elon Musk makes an attempt to purchase Twitter, WSJ seems to be again at Twitter’s previous suitors, like Salesforce, Disney and Alphabet. Tech reporter Tim Higgins explains why these previous conversations fell by means of and what’s completely different this time. Illustration: Nikki Walker

Twitter’s shares have been buying and selling beneath his provide worth since he made the bid April 14, usually an indication that shareholders are skeptical a deal will occur, although they did shut up roughly 4% Friday at $48.93, the day after he unveiled financing for the deal. Mr. Musk has indicated that if the present bid fails, he may promote his stake, which totals greater than 9%.

The financing included greater than $25 billion in debt coming from almost each world blue-chip funding financial institution except for the 2 advising Twitter. The rest was $21 billion in fairness Mr. Musk would offer himself, seemingly by promoting current stakes in his different companies akin to Tesla. The pace at which the financing got here collectively and the market selloff in latest days—which makes the all-cash provide look comparatively extra engaging—seemingly contributed to Twitter’s better willingness to entertain Mr. Musk’s proposal.

Twitter’s board ought to interact with Mr. Musk since its inventory has “gone nowhere” for the reason that firm went public eight years in the past, Jeff Gramm, a portfolio supervisor with Bandera Companions LLC, a New York hedge fund with about $385 million underneath administration, mentioned earlier. The agency final purchased Twitter shares in February and owns about 950,000 total, which accounts for about 11% of its portfolio.

Mr. Gramm mentioned Twitter’s board can’t stroll away from Mr. Musk’s provide with out offering another that provides actual worth to shareholders. “I’m unsure what that may be at this stage in addition to discovering a better bid,” he mentioned.

Elon Musk and Twitter

Write to Cara Lombardo at cara.lombardo@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com

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