Tesla founder and mining heir Elon Musk has entered into an agreement to purchase Twitter in a US$44 billion deal that will turn the social media network into a privately held company, with potentially large-scale ramifications ahead for the platform.
Yet in the immediate aftermath of the Monday announcement, it's difficult to say precisely how a Musk-led Twitter will differ from its shareholder-owned iteration.
Musk's statement announcing the go-private deal hinted at several possible changes, including "authenticating all humans," defeating spam and "enhancing the product with new features," but details remain to be clarified.
The statement quoted Musk as saying that he values free speech and hopes to "make Twitter better than ever" and maintain the platform's status as "the digital town square." Yet, according to the Electronic Frontier Foundation's director of international freedom of expression, Jillian York, Musk's commitment to free speech is highly questionable.
Questioning Musk's commitment to free speech
"He's talked about being a free-speech absolutist, but he doesn't really have the bona fides to back that up," York said. Musk has pursued legal action against people who have criticised him publicly in the past.
York also noted that Musk's ownership, coupled with the fact that direct messages on the platform remain unencrypted, could create – in theory – a problem for business users.
"For years, people have been calling on Twitter to encrypt direct messages," she said. "Theoretically, this means that [Musk] could access your DMs. And for businesses that could pose a threat."
Yet there's also plenty of reason to believe that Twitter might not change much, particularly in the short-term, as a result of Musk's buyout of the company. Unless Musk fires huge numbers of employees and replaces them, the people who make key decisions on content policy and moderation will still be there.
"It's hard for me to see how this will be better or worse for users than a bunch of shareholders having control over the company," York said.
Moreover, it's difficult to see how Musk could accomplish some of the expressed goals he outlined in today's statement, she added.
"Going after bots and misinformation is a hard thing to do," she said. "So I think … he's going to hit a really hard problem when he tries to deal with it."
Under the terms of the agreement, Twitter stockholders will receive US$54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction, expected to occur by the end of the year and subject to regulatory approval.
The purchase price represents a 38 per cent premium to Twitter's closing stock price on April 1, the last trading day before Musk publicly disclosed an approximately nine per cent stake in Twitter, the company said.
After that disclosure, Musk publicly offered to buy Twitter, and initially the company appeared ready to rebuff the offer — it adopted a so-called "poison pill" stricture, which holds that if any person or group acquires ownership of at least 15 per cent of Twitter’s outstanding common stock without the board’s approval, other shareholders would be allowed to purchase additional shares at a discount.
Ulitmately though, the board agreed to the offer.
"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," said Bret Taylor, Twitter's independent board chair.
To close the deal, Musk secured $25.5 billion of debt and margin loan financing, and is committing approximately $21.0 billion in cash.