Elon Musk acquired Twitter for $44 billion on Monday, the company announced, giving the world’s richest person command of a highly influential social media site that serves as a platform for political leaders, a sounding board for experts across industries, and an information hub for millions of everyday users.
The acquisition followed weeks of evangelizing on the necessity of “free speech,” as the Tesla CEO seized on Twitter’s role as the “de facto town square” and took umbrage with content moderation efforts he views as an escalation toward censorship. He said he sees Twitter as essential to the functioning of democracy and said economics are not a concern.
Ownership of Twitter gives Musk power over hugely consequential societal and political issues, perhaps most significantly the ban on former president Donald Trump that the site enacted in response to the Jan. 6, 2021, Capitol riot.
Under the terms of the deal, Twitter will become a private company and shareholders will receive $54.20 per share, the company said in a news release. The deal is expected to close this year.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in the release. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spambots, and authenticating all humans.”
“Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it,” he added.
Musk‘s Twitter deal further expands his portfolio beyond rocket company SpaceX, which has aspirations of landing on Mars, and carmaker Tesla, which pushed electric vehicles into the mainstream.
“He’s more powerful than countries now,” said Ross Gerber, a Tesla investor close to Musk who said he had bought Twitter shares last week in hopes the deal went through. “He has the most important technology asset in America … probably one of the most strategic military assets in the world … and now he has one of the most important communications tools in the world.”
Musk’s positions on free speech and how to police the site have put him relatively at odds with current Twitter leadership, raising questions about how he will seek to steer his changes through and whether they will affect Twitter’s current executive makeup.
That was a major topic at a town hall held by Twitter leadership Monday, during which employees questioned what Musk’s ownership might mean for the company, according to a record of the call obtained by The Washington Post. Employees expressed fears about everything from layoffs to the future of the business to whether Twitter will continue to make money from advertising.
Employees asked why CEO Parag Agrawal “trusted” Musk, and how Musk “would be held accountable” when, as a private company, Twitter would have no board of directors. Executives offered assurances but few direct answers and said that business would continue as usual until the deal goes through within three to six months.
Twitter co-founder Jack Dorsey, who served as CEO until Agrawal succeeded him late last year, said of Musk, “Elon is the singular solution I trust” with regard to the “problem of [Twitter] being a company.” Dorsey was arguing that Twitter should in fact be a public good but said clawing it back from Wall Street was the right initial step.
“I trust his mission to extend the light of consciousness,” he wrote.
Musk has said he would open up Twitter’s algorithm, putting content moderation decisions into clear view, although some researchers have said that would be difficult. He has also pushed for simple, broadly popular changes such as adding an edit button, as well as pledging to eliminate spambots. And he has said he wants to open up Twitter’s verification process to more users, so the authenticity of accounts can be determined more easily.
While it is unclear how Musk might address the Trump ban, he said at a TED conference this month he would want to be “very cautious” with permanent bans, preferring timeouts instead.
He and Trump have found areas of agreement in the past. Musk thanked Trump on Twitter for his support when Musk defiantly reopened Tesla’s Fremont, Calif., manufacturing plant in May 2020, in violation of county-level coronavirus shelter-in-place orders.
Musk, an avid Twitter user with more than 83 million followers, earlier on Monday hinted that a deal was close, laying out his vision for the future of Twitter in a midday tweet. “I hope that even my worst critics remain on Twitter because that is what free speech means,” he wrote.
The deal would rank among the largest activist takeovers of a publicly-traded company, according to Dealogic, which tracks data on mergers.
“Twitter has a purpose and relevance that impacts the entire world,” CEO Agrawal said in the release. “Deeply proud of our teams and inspired by the work that has never been more important.”
Twitter board chair Bret Taylor said the decision came down to the economics of the deal. “The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders,” he said in the release.
Twitter’s board completed its review of Musk’s offer last week, including coming up with possible valuations of the company, according to a person briefed on the discussions who spoke on the condition of anonymity because they were not authorized to discuss them publicly.
Taylor spoke directly with Musk on Saturday to update him on the process, the person said. At the conclusion of Twitter’s board meeting on Sunday, the company notified Musk it was ready to proceed with a deal around his proposed price, said that person and another person briefed on the discussions who spoke on the condition of anonymity for the same reasons.
The saga of Musk’s Twitter ownership kicked off on April 4 when Musk surprised investors by disclosing he had taken a more than 9 percent stake in Twitter.
Twitter responded by offering Musk a board seat, which it announced the next day. Musk turned the seat down a few days later. By April 13, according to financial filings, Musk expressed his intention to pursue a hostile takeover of the company.
Meanwhile, Twitter seemed poised to reject Musk’s bid. The board adopted a “poison pill” plan the day after Musk‘s offer became public that would make it much more difficult for the billionaire to buy the company.
The strategy, known as a shareholder rights plan, would let investors buy the Twitter stock at a discounted price unavailable to Musk. The flood of new shares would potentially make it prohibitively expensive for Musk to buy the company.
Musk then publicly outlined his financing, saying last week that he had secured $46.5 billion through loans by banks, including Morgan Stanley, and his own equity.
The company’s board of directors met with Musk on Sunday, and negotiations went into the early hours of Monday, according to one of the people familiar with the discussions. The two sides were focused on determining whether Musk had the financing to complete the acquisition, and they did not spend much time discussing Musk’s strategy for the future of the social network, said the people familiar with the discussions.
Almost all of the key events took place over video calls, the people said.
Musk had also met privately with several large Twitter shareholders in recent days, with some expressing their support for his bid, one of the people said. The two sides did not see regulatory issues, such as an antitrust review, as likely roadblocks to closing the deal, the person added.
It’s unclear whether Musk will retain other shareholders in the private company. Musk said previously that he would want to let the maximum allowable number of shareholders stay on.
One of the factors motivating the board’s decision was the recent challenging environment for tech stocks, which have experienced losses this year after riding high during the pandemic. The tech-heavy Nasdaq stock index, which nearly doubled from early 2020 to late 2021, has declined 18 percent this year. Growing Twitter’s value beyond Musk’s offering price would probably require bucking this trend and outperforming most of the tech sector, the person said.
Musk taking control will probably reignite the debate over whether social media companies should do a better job of policing content such as hate speech and violence, or if they should take a hands-off approach — a difficult balance for all social media. Twitter started with a hands-off approach but has instated more content moderation and policing, including its banning of Trump.
NAACP President Derrick Johnson said in a statement Monday that “lives are at risk, and so is American democracy.”
“Mr. Musk: free speech is wonderful, hate speech is unacceptable. Disinformation, misinformation, and hate speech have NO PLACE on Twitter. Do not allow 45 to return to the platform,” he said, referring to Trump.
The Bloomberg Billionaire’s Index puts Musk’s worth at about $259 billion, but much of his wealth is tied up in stock.
Beyond the bank loans, it’s unclear how Musk intends to pay for more than $21 billion of the deal which he described as “equity financing” from himself. He could borrow against or sell Tesla shares, though that path would raise risks for the share price of the carmaker.
“If Elon Musk were forced to sell shares of our common stock that he has pledged to secure certain personal loan obligations, such sales could cause our stock price to decline,” Tesla warned in its annual filing.
As of Monday afternoon, the proposed deal did not include a “go-shop” provision, a common term in large mergers that allows boards of directors to continue seeking a higher offer from other potential bidders, the person familiar with the deal said. The absence of this provision will probably speed up the close of the deal.
Some Tesla investors have bristled at Musk’s bid because they say it distracts from his responsibilities as chief executive and could slow momentum at one of the world’s most valuable automakers. And internally, Twitter employees have raised concerns about Musk’s potential effect on the company’s culture.
Musk is very active on the platform, has tweeted more than 17,300 times. He averages 125,180 likes per tweet, according to Socialtracker. Musk has earned praise for his wide-ranging approach to the site: He toggles freely between crude memes targeting his rivals, polls on the state of free speech, and critical business decisions.
His tweets have gotten him into trouble with the Securities and Exchange Commission. In 2018, he wrote that he had “funding secured” to take Tesla private at $420 a share.
He said he chose $420 “because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend would find it funny, which admittedly is not a great reason to pick a price,” according to the federal complaint.
The deal could raise new regulatory issues for Musk, too.
Because of the deal’s size, Musk will be required under federal law to report his purchase of Twitter to the Federal Trade Commission and the Justice Department. Multiple legal experts said the deal does not present clear antitrust concerns because Twitter is not being purchased by a social media competitor. But given Democrats’ focus on the concentration of power, especially in the tech sector, it’s possible that government regulators could open a review of the deal and slow it down.
“If you’re sitting in the agencies, you’re aware of that atmosphere,” said William E. Kovacic, a former Republican chair of the FTC.
Regulators could raise objections to Musk potentially collateralizing the purchase with Tesla stock, according to former SEC lawyer Tyler Gellasch, who now runs Healthy Markets, a nonprofit organization advocating market reforms.
“This is buying a lot of one company by borrowing against billions of dollars in shares of another company, and that very concentrated collateral carries risks,” Gellasch said. “If it leads the banks to say they’re going to need more and different collateral, that wouldn’t block Musk’s purchase per se, but it could make the logistics of the deal dicier.”
In January 2020, thousands of Twitter employees gathered in Houston for a corporate summit called #OneTeam. During the event, Jack Dorsey, Twitter’s chief executive at the time, revealed he had invited a surprise guest. Then, with a wave and a smile, Elon Musk appeared on giant screens above the stage. The crowd cheered, clapped, and pumped fists. “We love you,” one employee shouted.
Inside Twitter today, surprise announcements about Mr. Musk land differently. Employees said they had largely stopped celebrating the richest man in the world since he declared his intent this month to buy Twitter, scrap its content moderation policies and transform the publicly traded company into a private one. On Monday, Twitter announced it had accepted Mr. Musk’s offer to buy the company for about $44 billion.
As the takeover fight played out over the last two weeks, Twitter employees said they were frustrated that they had heard little from management about what it meant for them, even as Twitter closed in on a deal with Mr. Musk on Monday morning. They asked their chief executive, Parag Agrawal. They asked Mr. Musk himself in questions sent on Twitter. Some even went to Charles Schwab, the financial firm that manages their stock options, for clarity about the impact a sale of the company would have on them.
But they were not getting very many answers before Mr. Musk’s bid succeeded, said 11 Twitter employees who asked to not be named because they were not authorized to speak publicly, even as it became clear that they could soon find themselves reporting to Mr. Musk.
On Monday afternoon, Mr. Agrawal and Twitter’s chairman, Bret Taylor, finally met with employees to discuss the deal. Compensation would remain largely the same under Mr. Musk, Mr. Agrawal said, but he did not make the same assurances about Twitter’s policies and culture.
“We constantly evolve our policies,” Mr. Agrawal said in response to an employee question about whether former President Donald J. Trump would be allowed back on the platform. “Once the deal closes, we don’t know what direction this company will go in.”
The silence that hovered over the negotiations is routine in takeover fights, Mr. Taylor told employees. As the board of directors confers with bankers, lawyers, and expensive public relations firms, employees are often kept in the dark. But for employees at Twitter, a company that has billed itself as the world’s town square, finding out what is happening to their company primarily through Twitter, the service they built, was particularly embittering.
After years of leadership squabbles, demands for change from activist investors, and the boundary-testing tweets of Mr. Trump, Twitter’s more than 7,000 employees are accustomed to turmoil. But some of them say the takeover by the mercurial billionaire has hit them in ways other company crises have not.
Employees said they worried that Mr. Musk would undo the years of work they had put into cleaning up the toxic corners of the platform, upend their stock compensation in the process of taking the company private and disrupt Twitter’s culture with his unpredictable management style and abrupt proclamations.
But Mr. Musk also has fans among Twitter’s rank-and-file, and some employees have welcomed his bid. In an internal Slack message seen by The New York Times that asked if employees were excited about Mr. Musk, about 10 people responded with a “Yes” emoji. A Twitter spokesman declined to comment.
If Twitter is worth buying, much of its value is in the employees who build and manage the service, said David Larcker, a professor of accounting and corporate governance at Stanford University. “The wild card is, what if it becomes a very different company than they thought they were working for? It’s an uncomfortable working relationship,” he said.
Mr. Musk has made some of his intentions clear in regulatory filings, tweets, and public appearances: The company must scrap nearly all of its moderation policies, which ban content like violent threats, harassment, and spam. It must provide more transparency about the algorithm it uses to boost tweets in users’ newsfeeds. And it must become a private company.
Twitter has been expanding its content moderation policies since 2008 when its 25th employee was hired specifically to combat abuse on its platform. The teams overseeing moderation and safety have now grown to hundreds of employees.
Many Twitter employees feel personally invested in the company’s effort to encourage healthy conversation — even if they do not directly work on content moderation — and have pressed executives to crack down further on hate speech and misinformation, six employees said. They see Mr. Musk’s proposal to revert to Twitter’s early, lax approach as a rebuke of their work.
But other employees have argued in internal messages seen by The Times that their co-workers have shifted too far to the left side of the political spectrum, making employees who support Mr. Musk’s plans too uncomfortable to speak up. In a worker-run survey of nearly 200 Twitter employees on Blind, an anonymous workplace review app, 44 percent said they were neutral on Mr. Musk. Twenty-seven percent said they loved Mr. Musk, while 27 percent said they hated him.
Although executives and employees at Twitter have agreed with Mr. Musk about changes to its algorithm, that work is in its earliest stages and could take years to complete. That could test something Mr. Musk is not particularly known for — patience.
One of the top concerns among Twitter workers is whether they will take a financial hit from Mr. Musk’s acquisition. Many Twitter employees make 50 percent or more of their total compensation from Twitter stock. Some employees said they feared missing out on the long-term value of their stock at Mr. Musk’s price of $54.20 per share.
At the meeting with employees on Monday, executives tried to assure employees that they wouldn’t be shortchanged by Mr. Musk’s acquisition. Mr. Agrawal told employees that their stock options would convert to cash when the deal with Mr. Musk closes, which he estimated would take between three and six months. Employees would receive their same benefits packages for a year after the deal was finalized and there were no immediate plans for layoffs, he added.
In an earlier attempt to quell financial worries, Sean Edgett, Twitter’s general counsel, told employees that any potential buyer would most likely be required to keep employee equity “as is” or provide equivalent compensation, like a cash award.
Mr. Edgett, who made his comments before the deal with Mr. Musk was announced, stressed that employees should not view his guidance as insight into the deal-making. “This is meant to provide some peace of mind and explain how these things typically work, not because we believe there will be one outcome versus another,” he wrote in messages to employees reviewed by The Times.
Twitter has been on a hiring spree, spending $630 million on stock-based compensation in 2021, a 33 percent increase from the previous year. Twitter predicted in a February earnings report that it would spend between $900 million and $925 million on stock-based compensation this year.
But Mr. Musk’s campaign has also begun to undercut Twitter’s attempts to recruit new employees, according to internal documents outlining the company’s hiring efforts that were viewed by The Times. Prospective hires have expressed skepticism about Mr. Musk’s plans to transform Twitter and upend its content moderation, those documents said.
Recruits have also fretted that the shares included in their offer letters could quickly become devalued if Mr. Musk took Twitter private.
Twitter’s recruiting problem could balloon further if current employees quit, as some have warned they would do if Mr. Musk took over. Other employees worried about layoffs or the loss of work visas under Mr. Musk and raised questions about these issues with Mr. Agrawal.
Managers responsible for hiring have been asked to keep track of how many prospective employees turn down job offers because of fears about Mr. Musk, according to internal communications reviewed by The Times.
Employees have also wondered: Could he also move Twitter’s headquarters to Texas, as he did with Tesla? Could he end the company’s flexibility about returning to the office, which has become a selling point for employees and recruits? Mr. Musk, after all, fought with officials in California to keep his car factory open early in the pandemic.
Mr. Agrawal tried to calm his workforce. In the question-and-answer session on Monday, he urged employees to “operate Twitter as we always have,” adding that “how we run the company, the decisions we make, and the positive changes we drive — that will be on us, and under our control.”
The stress at the mention of Mr. Musk is a stark contrast to the welcome he enjoyed from employees two years ago. Although some employees at the event in 2020 said they were skeptical of Mr. Musk, many of them listened attentively as he gave his advice for Twitter: The company should step up its moderation, he said, by doing more to weed out bots and scammers from the actual humans using the platform.
“By the way, do you want to run Twitter?” Mr. Dorsey asked Mr. Musk.
The assembled Twitter employees laughed. Mr. Musk did not immediately answer.