Twitter announced on Monday that it has agreed to sell itself to Elon Musk for $44 billion in a transaction that can expand the billionaire’s business empire and make him in charge of one of the world’s most influential social networks. In little than a month, Elon Musk, the CEO of Tesla and SpaceX, became one of Twitter’s top owners, was offered and denied a seat on the board, and launched a bid to buy the company.  Under the terms of the agreement, shareholders would receive $54.20 in cash for each share of Twitter stock they held, matching Musk’s original offer and representing a 38 percent amount over the stock price before Musk revealed his ownership in the company.

“Free speech is the backbone of a functional democracy, and Twitter is the digital town square where critical issues affecting humanity’s future are debated,” Musk said in a statement released Monday. “Twitter has enormous potential, and I’m excited to work with the company and the Twitter community to realize it.”

Twitter’s board of directors completely authorized the purchase which was scheduled to close this year. Elon Musk stated last week that he had secured $46.5 billion in finance to buy Twitter, an apparent turning point that prompted the company’s board of directors to seriously explore the purchase. The board met on Sunday to consider Musk’s proposal.

In a statement, Twitter independent board chair Bret Taylor stated, “The Twitter Board conducted a thoughtful and comprehensive process to review Elon’s proposal with a deliberate focus on value, predictability, and finance,” calling the acquisition “the greatest way forward for Twitter’s stockholders.”

Following the announcement of the acquisition, Twitter shares were up about 6%, hovering around $51.84, slightly below the offer price. The transaction must be approved by shareholders and regulators. Twitter CEO Parag Agrawal said that he will conduct an all-hands meeting with Taylor on Monday afternoon to answer questions regarding the purchase. “I understand this is a big transition, and you’re probably thinking about what it means for you and Twitter’s future,” he continued.

Elon Musk’s Twitter Journey

Musk made news last month when he announced that he was the company’s single largest shareholder, with a 9.2 percent stake. Despite his refusal to join the company’s board of directors, Musk eventually made a surprise hostile takeover proposal for $54.20 per share in cash. In his SEC filing, he stated, “I invested in Twitter because I believe in its potential to be the forum for free speech around the world, and I believe free speech is a basic essential for a functioning democracy.” This move angered Twitter, which stated that Musk will be prevented from growing his ownership beyond 15%. It swiftly changed its mind after the CEO stated that he had already secured $25.5 billion in funding for the purchase and will own a $21 billion interest in the company.

Financing and transaction terms

The transaction, which was unanimously authorized by the Twitter Board, is likely to close by the end of the year and the approval is pending by Twitter stockholders. Twitter stockholders will get $54.20 in cash for each share of Twitter common stock when the proposed transaction is completed, according to the terms of the deal. The purchase price is 38% higher than Twitter’s closing stock price on April 1, 2022, the last trading day before Musk declared his 9.2% ownership in the company. Musk has obtained $25.5 billion in fully committed debt, $21 billion in equity commitment, and margin loan financing for his 100% Twitter purchase transaction.

Why did Elon Musk take over Twitter?

Musk expressed his dissatisfaction with the company’s strict content management measures. This moderation, he claimed, posed a threat to free expression on a platform that has become increasingly critical of politics and government. About 7000 people work for Twitter, the majority of whom are involved in content moderation and software development. Musk is correct to target Twitter if he wants to have an impact on public conversation, according to experts. Employees at Twitter, on the other hand, had varied feelings about the buyout.

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