Twitter entered into a definitive agreement Monday to be acquired by Elon Musk for $54.20 a share in a cash transaction valued at $44 billion. Twitter stock jumped, as the company will be taken private upon completion.
In announcing the deal, Twitter Chief Executive Parag Agrawal said in a written statement: "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."
Twitter stock surged 5.7% to close at 51.70 on the stock market today. The deal represents a 38% premium to Twitter's closing stock price on April 1. That was the last day before Musk disclosed his 9.1% stake in Twitter stock.
"Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21 billion equity commitment," the news release said. "There are no financing conditions to the closing of the transaction."
Twitter Stock: Board Planned To Rebuff Offer
The company initially indicated it would rebuff Musk's offer. On April 14, Twitter implemented a "poison pill" intended to make the deal more costly. Twitter apparently reversed course after Musk said he had lined up financing for the deal, calling it his final offer.
"It all came down to no other bidders or white knights emerging in the M&A process and Twitter's board's back was against the wall once Musk detailed his $46 billion in financing last week to get pen to paper on this deal," Wedbush analyst Dan Ives wrote in a note to clients.
The deal is expected to close this year, subject to shareholder approval.
Twitter reports quarterly results before the market open on Thursday.
Musk began amassing shares in the company earlier this year. He owned 9.1% of Twitter stock as of his last filing with the Securities and Exchange Commission on April 20.
Musk Calls For Free Speech
"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 written remarks.
"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 spam bots, and authenticating all humans," he went on to say. "Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it."
Musk has more than 83 million followers on Twitter. All Monday, Twitter users were actively commenting about Musk and the acquisition. The comments both praised and criticized Musk.
Musk sent out a tweet saying: "I hope that even my worst critics remain on Twitter, because that is what free speech means."
The world's richest man and chief executive of Tesla, Musk is worth about $259 billion according to the Bloomberg Billionaire's Index. Much of his wealth is tied up in stock.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
