Elon Musk to buy Twitter for $44B US
2 sides negotiated into early hours of Monday to hash out deal
- Royal Bank, CIBC among lenders who helped finance bid
- Musk says free speech is the 'bedrock of a functioning democracy'
Elon Musk has sealed a deal to acquire Twitter for $44 billion US.
The move comes after the richest man in the world started buying shares in the company in March, complaining that the social media network wasn't doing enough to ensure free speech.
The company rebuffed his advances for weeks before the two sides struck a deal over the weekend that was made official on Monday.
The purchase price of $54.20 a share is a 38 per cent premium to what the shares were worth before Musk's stake became public.
"The Twitter board conducted a thoughtful and comprehensive process to assess Elon's proposal with a deliberate focus on value, certainty, and financing," Twitter chairman Bret Taylor said.
"The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders."
At $44 billion US, the deal will be one of the largest leveraged buyouts in corporate history. More than $25 billion US of the purchase price will be financed with debt. Presuming that shareholders vote to accept the proposal, the deal also faces numerous regulatory hurdles.
Two Canadian banks — the Royal Bank of Canada and CIBC — were among a consortium of a dozen lenders who 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 compelled him to take over the company.
"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 Monday, adding that he wants to make the company's algorithm open source — that is, publicly accessible — to increase trust.
"Twitter has tremendous potential," he said. "I look forward to working with the company and the community of users to unlock it."
Ryan Holmes, founder of Vancouver-based tech company Hootsuite, says the move to open up the company's algorithm has huge potential.
Effectively, 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 bullish" on making it open source, which could be a "really powerful thing" for Twitter.
He said the problem with closed algorithms is that nobody knows why they're seeing the content they do, but with open source, "people are able to go in and look at it, to audit it, to understand what's getting served up and for what reasons."
Holmes said opening it up would create "a lot of transparency" and "in Twitter doing this, it would force the hands of the other social networks."
The agreement is the latest twist in the fast-moving saga, which began under a month ago when Musk disclosed in a regulatory filing than he had quietly amassed 73 million shares in the company — more than any other single entity.
WATCH | Analyst explains why Musk would want to buy Twitter:
After initially inviting him to join the board, the company eventually changed direction and set into motion a "poison pill" plan designed to make the company harder to take over.
The two sides came together to hammer out a deal over the weekend after Musk announced he had secured more than $46 billion for a takeover plan.
Wedbush analyst Daniel Ives, who covers Twitter, says while he expected the move, the price tag still came as a bit of a surprise.
"Taking private is going to have a lot of change for Twitter, but Musk just bet 20 per cent of his net worth on Twitter," Ives said. "It's not just about freedom of speech."
I hope that even my worst critics remain on Twitter, because that is what free speech means—@elonmusk
Kate Klonick, a professor of law at St. John's University in New York, said the news shines a light on just how much influence these massive social media giants have in our modern life.
"This is exposing a lot of the problems that have long been there and that we've been trying to grapple with for a long time," she said in an interview. "This is just a very dramatic kind of introduction of how quickly something like this can can change hands in terms of private enterprise."
Technology analyst Amber Mac says she has been an avid user of the service for several years, and has some concerns about what Musk's control of the company could mean.
"Elon Musk is someone who is always talking about free speech in an absolute way, and I think that causes some potential concerns for people on the platform who are often already victims of bullying and harassment," she told CBC News.
"If we see this platform go in a direction where there are no guardrails in place, I think this could mean a huge number of people potentially leaving."
With files from the CBC's Meegan Read