Tesla CEO Elon Musk has made his “best and final” offer to buy 100 percent of Twitter for around $43 billion, according to an updated filing with the US Securities and Exchange Commission (SEC) on Thursday, 14 April.
Twitter said that the board has received the "unsolicited, non-binding" proposal and 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”.
In a letter delivered to Twitter on 13 April, Musk has 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”.
The price represents a 38 percent premium over the closing price of the stock on 1 April, the day Elon publicly announced his acquisition of the shares.
In his letter, Musk said he intends to take Twitter private and would need to reconsider his position as shareholder if his offer is not accepted. "Twitter has extraordinary potential. I will unlock it," he wrote.
Twitter CEO Parag Agrawal revealed that Elon Musk decided not to join the company's board, days after welcoming him to the board, days after news broke that the Tesla CEO became Twitter's largest sole shareholder with a 9.2 percent stake worth $3 billion.
Musk is the richest man on the planet with a wealth of about $260 billion according to Bloomberg.
'Twitter Has Extraordinary Potential, I Will Unlock It'
The move lends weight to the theory that the share cap mentioned in Twitter's filing with the SEC is one of the reasons he didn't accept a seat on the board.
According to filing, Musk cannot own more than 14.9 percent of Twitter stock while he is a director of the board, and for 60 days after. This provision could have prevented the takeover that Musk is now attempting.
Here's the full text of Elon Musk's letter to Twitter's board, as it appears in the SEC filing.
Bret Taylor
Chairman of the Board,
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.
Elon Musk
Musk Faces Class Action Lawsuit
Meanwhile, Twitter shareholder Marc Bain Rasella has sued Elon Musk.
Rasella claims that Musk's delay in disclosing his stake kept the share price down allowing him to continue buying more shares at a lower price, effectively cheating the sellers out of increased profits.
Musk started to acquire Twitter shares from 28 January 2022.
The class action lawsuit, filed in a New York federal court on Tuesday, says that by 14 March 2022, Musk had acquired more than a 5 percent ownership stake in Twitter.
US law requires investors to file a Schedule 13 form with the Securities and Exchange Commission (SEC) within 10 days of passing the 5 percent ownership threshold.
Musk crossed this threshold on 24 March 2022 but did not file a Schedule 13 with the SEC until 4 April and, in the meantime, continued to amass Twitter shares, the lawsuit alleges.
"When Musk finally filed the required Schedule 13, thereby revealing his ownership stake in Twitter, the company’s shares rose from a closing price of $39.31 per share on 1 April 2022, to close at $49.97 per share on 4 April 2022 – an increase of approximately 27 percent," it says.
"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, missed the resulting share price increase as the market reacted to Musk’s purchases and were damaged thereby," the lawsuit adds.
(With inputs from Bloomberg)
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