By Yasin Ebrahim
Investing.com – Twitter said Monday it had accepted Tesla (NASDAQ:TSLA) CEO Elon Musk’s $44 billion to take the social media company private.
Twitter Inc (NYSE:TWTR) was up more than 5% in recent trading.
Under the terms of the agreement, Twitter shareholders would receive $54.20 in cash for each share of Twitter stock that they own.
The purchase price represents a 38% premium to Twitter's closing stock price on April 1, 2022, which was the last trading day before Musk disclosed his approximately 9% stake in Twitter.
“The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders,” Twitter said.
The announcement comes after Twitter last week attempted to thwart Musk’s attempt to build up a bigger stake to take over the company by launching a limited duration shareholder rights plan, or “poison pill.”
The limited duration shareholder rights plan would allow other shareholders to buy shares of Twitter at a discount, diluting Musk’s stake if it reaches 15%, which is the threshold for triggering the so-called poison pill, making it expensive for him to acquire the company.
The move bought Twitter more time to find another buyer for the company, but the social media company failed to attract a white knight and ultimately had to reconsider Musk's offer after he secured private equity backing for the deal.
“While the board approved the poison pill which essentially gave them time to find a "white knight" and second bidder, likely they are now empty handed from private equity circles staring at a hostile tender offer process likely kicked off this week by Musk for the bid,” Wedbush said in a note.
Musk secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment toward the deal, Twitter said.
Twitter plans to release its first quarter fiscal year 2022 results before market open on Thursday.