Twitter to 'carefully review' Elon Musk's $43.4bn bid

Elon Musk has made an offer to buy Twitter (TWTR) with a bid that values the company at $43.4bn (£33bn), a regulatory filing showed on Thursday.

In a statement, Twitter said it will “carefully review” the offer. "Twitter's board will evaluate an "unsolicited, non-binding" offer from Tesla chief Elon Musk to acquire the social media company, the social media company said.

"The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders," Twitter said as it confirmed it received Musk's bid valuing the company at $43.4 billion.

Musk's offer price of $54.20 per share represents a 38% premium to the closing price of Twitter's stock on April 1, the last trading day before the Tesla CEO's over 9% investment in the company was publicly announced.

Read more: Twitter shares soar as Elon Musk takes $2.9bn stake

Twitter's shares jumped 12% in premarket trading.

In a letter to Twitter chairman Bret Taylor, the Tesla boss explained his bid.

“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.

“However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.

“As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced.

"My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder. Twitter has extraordinary potential.

“I will unlock it.”

Musk offered to “acquire all of the outstanding Common Stock of the Issuer not owned by the Reporting Person for all cash consideration valuing the Common Stock at $54.20 per share,” according to an updated 13D filing with the SEC.

"This represents a 54% premium over the closing price of the common stock on January 28, 2022, the trading day before the reporting person began investing in the issuer, and a 38% premium over the closing price of the common stock on April 1, 2022, the trading day before the reporting person’s investment in the Issuer was publicly announced," the filing stated.

The SEC filing also contains a voice script, in which Musk says he is not playing back-and-forth, in a ‘Best and Final’ offer.

The Tesla boss said:

"Best and Final:

a. I am not playing the back-and-forth game.

b. I have moved straight to the end.

c. It’s a high price and your shareholders will love it.

d. If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.

i. This is not a threat, it’s simply not a good investment without the changes that need to be made.

ii. And those changes won’t happen without taking the company private.

iii. My advisors and my team are available after you get the letter to answer any questions

a. There will be more detail in our public filings. After you receive the letter and review the public filings, your team can call my family office with any questions."

Elon Musk recently purchased a 9.2% stake in Twitter, worth almost $3bn (£2.29bn).

Read more: Elon Musk will no longer join Twitter’s board

According to a filing with the US Securities and Exchange Commission (SEC) Musk holds a 9.2% passive stake in micro-blogging site Twitter Inc as of 10 February 2022.

He was offered a board seat but refused it. Had he taken a board seat, he would have been limited in how much of the company's shares he could own, with a 14.9% cap.

Neil Campling, head of TMT research at Mirabaud Equity Research, predicts Twitter’s CEO Parag Agrawal will be looking for a new job if Musk succeeds:

"Clearly there is no love lost between Musk and the CEO, so the CEO – who has only been in the job for a proverbial five minutes but has already made plenty of contradictory comments – will be tapping up his LinkedIn connections for a job," Campling said.

Justin Hollands, managing director of Bestinvest, added: "Just when you’re thinking of winding down for the long Easter weekend, along comes Elon Musk with an audacious, hostile bid to buy the entirety of Twitter at $54.20 a share and take it private.

"This comes just days after an abrupt backing out of plans for the billionaire to join the Board having built a substantial position of over 9% in the stock. The take-it-or-leave it price on the table represents a 54% premium to the price Twitter’s shares were trading at prior to the revelation Musk had built his stake, but is well below the $77 price that the shares peaked at on 21 February last year.

"It remains to be seen whether this bid is successful, but the immediate lift to the stock price will certainly have boosted a handful of funds."

Zoe Stabler, investments writer at the personal finance comparison site, finder.com, said: "It remains to be seen how Twitter will view Elon Musk’s takeover bid, but a lot of people will be excited by it. He has an army of devoted fans who follow his every move and will be piling into Twitter now – as evidenced by the rise in its pre-trading share price.

"Even those who don’t follow him too closely may be tempted to invest in Twitter, without fully realising the potential risks of doing so. Our recent research found that half of investors in the UK (51%) are using social media to help inform them when deciding what to invest in, while research we did in 2019 found that 7% of investors bought a company’s stock because they like its ads or spokesperson.

Watch: Musk sued over late disclosure of Twitter stake