Elon Musk has reached an agreement to acquire Twitter for US$44 billion.
The move comes after the world’s richest man began buying shares in the company in March, complaining that the social media network was not doing enough to ensure free speech.
The company rebuffed its advances for weeks before the two sides reached a deal over the weekend that was made official on Monday.
The purchase price of $54.20 per share is a 38% premium to what the shares were worth before Musk’s stake went public.
“Twitter’s Board of Directors conducted a thoughtful and comprehensive process to evaluate Elon’s proposal with a deliberate focus on value, certainty and funding,” Twitter Chairman Bret Taylor said.
“The proposed transaction will provide a substantial cash bonus, and we believe it is the best way forward for Twitter shareholders. »
At US$44 billion, the deal will be one of the largest leveraged buyouts in the company’s history. More than US$25 billion of the purchase price will be debt financed. Assuming shareholders vote to accept the proposal, the deal also faces numerous regulatory hurdles.
Two Canadian banks – Royal Bank of Canada and CIBC – were part of a consortium of a dozen lenders that agreed to help Musk finance his bid, with Royal agreeing to lend Musk $750 million and CIBC 400 million, according to a regulatory filing.
Musk reiterated that it was his desire to ensure free speech that drove him to take over the company.
“Free speech is the foundation of a functioning democracy, and Twitter is the digital public square where issues vital to the future of humanity are debated,” Musk said Monday, adding that he wanted to make the company’s algorithm open source, that is, publicly. accessible — to increase trust.
“Twitter has huge potential,” he said. “I look forward to working with the company and the user community to unlock it. »
Ryan Holmes, founder of Vancouver-based technology company Hootsuite, says the decision to open up the company’s algorithm has huge potential.
In fact, the algorithm is a program that sorts content for the user and decides what content they should see, and Holmes says he’s been “really optimistic” about making it open source, which could be a “one thing.” really powerful” for Twitter.
He said the problem with closed algorithms is that no one knows why they’re seeing the content they’re seeing, but with open source, “people can come in and look at it, audit it, figure out what’s being served And why. »
Holmes said opening it would create “a lot of transparency” and “by doing this on Twitter it would force the hand of other social networks.”
The deal is the latest twist in the rapidly evolving saga, which began less than a month ago when Musk revealed in a regulatory filing that he had quietly amassed 73 million shares in the company – more than any other entity.
WATCH | An analyst explains why Musk would want to buy Twitter:
After initially inviting him to join the board, the company eventually changed direction and implemented a “poison pill” plan designed to make the company more difficult to take over.
The two sides came together to strike a deal over the weekend after Musk announced he had secured more than $46 billion for a buyout plan.
Wedbush analyst Daniel Ives, who covers Twitter, said while he expected the move, the price was still a bit of a surprise.
“The private stance is going to be a lot of change for Twitter, but Musk just bet 20% of his net worth on Twitter,” Ives said. “It’s not just about freedom of expression. »
I hope even my worst critics stay on Twitter, because that’s what free speech means.
Kate Klonick, a law professor at St. John’s University in New York, said the news shines a light on the influence these massive social media giants have had on our modern lives.
“It exposes a lot of issues that have been around for a long time that we’ve been trying to tackle for a long time,” she said in an interview. “It’s just a very dramatic introduction to how quickly something like this can change hands in terms of private enterprise. »
Technology analyst Amber Mac says she’s been an avid user of the service for several years and worries about what Musk’s control of the company might mean.
“Elon Musk is someone who always talks about free speech in absolute terms, and I think that causes potential concerns for people on the platform who are often already bullied and harassed,” he said. she told CBC News.
“If we see this platform going in a direction where there are no guardrails in place, I think that could mean that a large number of people could leave. »