Twitter faces an uncertain future, chief executive Parag Agrawal has told employees, after the social media giant agreed to be acquired by US billionaire Elon Musk in a deal worth $44bn.
The Telsa and SpaceX chief, a self-proclaimed “free speech absolutist”, acquired a 9% stake in the micro blogging business earlier this month.
He was initially offered a seat on the board but instead made a bid for the entire company, which Twitter’s board accepted on Monday. The cash offer of $54.20 per share is a 38% premium to the closing price on 1 April, the last trading day before Musk acquired his stake.
Musk said: “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.” He wants to made Twitter’s algorithms open source, “to increase trust”, introduce new features and to “defeat the spam bots”.
Agrawal – who took over as chief executive from founder Jack Dorsey in November – said: “Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams, and inspired by the work that has never been more important.”
According to Reuters, however, speaking to employees at a town hall meeting after the deal was announced, Agrawal also conceded: “Once the deal closes, we don’t know which direction the platform will go.”
The acquisition, which remains subject to shareholder and regulatory approval, has divided opinions. In a series of tweets, Dorsey said: “In principle, I don’t believe anyone should own or run Twitter.”
But overall he welcomed the move, arguing that Musk was “the singular solution I trust. I trust his mission to extend the light of consciousness.”
He added: “Twitter as a company has always been my sole issue and my biggest regret. It has been own by Wall Street and the ad model. Taking it back from Wall Street is the correct first step”.
But Vivian Schiller, former head of global news at Twitter, told Radio 4’s Today she was “concerned” about Musk’s approach to free speech, noting: “Content moderation is an incredibly nuanced, complicated and very imperfect art.”
The White House, meanwhile, said president Joe Biden had “long been concerned about the power that large social media platforms have over our everyday lives”, and that they must be held accountable “for the harms they cause”.
As at 0945 BST, shares in Twitter were up just under 1% in pre-market trading.
Russ Mould, investment director at AJ Bell, said: “The fact Twitter’s share price is trading below Musk’s offer price shows that parts of the market remain sceptical over whether this deal will complete.
“After all, Musk is one of the most unpredictable characters in business today, and while his offer to buy the company came out of the blue – and was recommended by the board in only a matter of weeks – this is not a done deal until he’s secured all the necessary support from shareholders, and the money has been wired from his account.
S&P Global placed Twitter on ‘CreditWatch’, noting: “The deal will be financed by a mixture of equity and debt, and we expect Twitter’s leverage will increase substantially above our 1.5x downgrade threshold for the ‘BB+’ issuer credit rating.
“The proposed transaction increases risks and uncertainly around potential changes in strategy, management and governance.”
The deal is expected to close this year. Twitter said Musk had secured $25.5bn of fully committed debt and margin loan financing, and was providing an equity commitment of around $21.0bn.