Who Owns Twitter?
As of April 25th, 2022, Elon Musk owns Twitter. The company was purchased by Elon Musk for $54.20 per share, at about $44 billion. After, on April 14th, 2022, Elon Musk made an offer to purchase the whole company.
How was Twitter ownership distributed before Elon Musk purchased it?The largest individual shareholder is the company’s co-founder and CEO, Jack Dorsey, who, as of 2019 owned a 2.3% stake in the company’s stocks. Other non-individual, institutional shareholders comprise The Vanguard Group (with 10.33%), BlackRock (with 6.6%), and Morgan Stanley (with 5.86%).
The Beneficial Owners of Twitter, comprise both individual and institutional shareholders (Data Source: Twitter Proxy Statement).The timeline of Elon Musk’s acquisition of TwitterIn April 2022, Elon Musk finalized the acquisition of Twitter, in one of the most controversial deals of business history.
Let’s review the timeline.
Musk placed, out of the blue, a bet to take over the whole company. It was April 14th, 2022:
The public records show the whole conversation of the offer Musk made to take over Twitter. Below is the main extract, of the conversation, between Musk and the Twitter’s board, as per SEC Filings, Musk had sent a message to Bret Taylor, Chairman of the Twitter’s 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
In a follow-up text, Musk highlighted:
As I indicated this weekend, I believe that the company should be private to go through the changes that need to be made.
After the past several days of thinking this over, I have decided I want to acquire the company and take it private.
I am going to send you an offer letter tonight, it will be public in the morning.
Are you available to chat?
Elon Musk
As a final message to the Twitter’s board, Musk highlighted:
1. Best and final
a. I’m not playing the back-and-forth game.
b. I have moved straight to the end.
c. It’s a high price and your shareholders will love it.
d. If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.
i. This is not a threat, it’s simply not a good investment without the changes that need to be made.
ii. And those changes won’t happen without taking the company private.
2. My advisors and my team are available after you get the letter to answer any questions
a. There will be more detail in our public filings. After you receive the letter and review the public filings, your team can call my family office with any questions.
Elon Musk
In short, Musk had offered to purchase Twitter, for $54.20 per share, a 54% premium, before Musk had started to buy Twitter shares.
While the offer was good from a valuation standpoint, the board tried to fight it. Also influential business commentators were against it.
As Cramer highlighted:
This is one of those where they are literally not doing their job, there’s no fiduciary responsibility if they just say, ‘you know what, we take it, there are times when individual directors are opened up for a level of lack of fiduciary that I think crosses the line. This crosses the line.
"I don't think this is a serious offer and the market doesn't think this is a serious offer," @profgalloway says
— Brian Stelter (@brianstelter) April 15, 2022
Our complete special report about Elon Musk's bid for Twitter is streaming here: https://t.co/F0bGzt9bXJ pic.twitter.com/IfqsepkxVt
Throughout the deal, none expected it to go through so quickly. Indeed, given the controversy around Twitter, most business people thought this would have turned into a few months’ fight over Twitter’s ownership.
Yet, things tumbled very quickly. And by April 25th, 2022, the deal was officially announced!
The announcement of Twitter’s board, accepting the offer from Elon Musk to buy the company.As explained in the official press release:
Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter.
Bret Taylor, Twitter’s Independent Board Chair, highlighted:
The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.
Parag Agrawal, Twitter’s CEO, highlighted on Twitter
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.
How did Elon Musk secure the funding to purchase the company?
He secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment.
A Glance at Twitter Business Model
Twitter is a platform business model, monetizing the attention of its users in two ways: advertising and data licensing. In 2019, advertising represented 86.5% of its revenue at almost $3 billion. The remaining part is data licensing at 13.5% (over $465 million) primarily related to enterprise clients using data for their analyses.
According to eMarketer, in the US alone, digital advertising spending will be around $129 billion. Within this market, the most significant players are companies like Google ($116 billion in 2018 from search advertising), Facebook (over $55 billion in advertising revenues in 2018), Amazon (over $10 billion in 2018 from product advertising), Twitter (with $2.6 billion in advertising in 2018), and Microsoft’s Bing (search advertising for about $7 billion in 2018) Read Also: Twitter Business Model, Digital Business Models, Platform Business Models, Attention-Based Business Models.
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