Elon Musk plans to take Twitter Inc. public again in as little as three years of buying the social media company for $44 billion, according to a report by the Wall Street Journal, which cited sources familiar with the matter.
The deal is expected to close later this year, subject to conditions including the approval of Twitter shareholders and regulators, the company has said.
- Elon Musk purchased a 9.2 per cent stake in Twitter, a publicly traded corporation, in April. Later same month, Musk offered to buy a 100 per cent stake in Twitter in order to make it private. Musk requested that the firm be taken private for $54.20 a share, and the board of directors agreed. This transaction is valued at $44 billion.
- Morgan Stanley, Bank of America, and many other institutions have agreed to lend $13 billion, and $12.5 billion secured in some of Musk’s Tesla stock. Musk, the world’s known richest man, claims he will cover the remaining $21 billion alone as majority of his wealth is invested in Tesla and SpaceX, his rocket company.
New financing sources
While private equity firms normally spend about five years reorganising a company before bringing it back public, Elon Musk’s initial three-year timeframe could signal that he believes he can quickly remodel Twitter to increase its profitability, according to the Wall Street Journal.
According to the sources, Musk is in negotiations with major investors such as private equity firms, hedge funds, and high-net-worth individuals about providing preferred equity funding for the acquisition.
Preferred equity would pay a predetermined dividend from Twitter, similar to a bond or a loan. He hopes to lessen his own income in the deal according to reports.
The sources also added that (APO.N) and (ARES.N) are among the private equity firms in negotiations to provide the funding.
Musk is still contemplating whether or not to seek the advice of partners in writing the equity check needed for the deal. However, the source said that Elon Musk is not looking to take on more debt for the Twitter transaction.
This new financing, which could be in the form of preferred or common equity, could reduce Musk’s cash contribution and a margin loan obtained against his Tesla shares.
Given the new investor interest in the deal financing, he may seek to reduce the size of the margin loan.
Musk’s agenda point
Even though Twitter, as a public entity, will help the company generate funds, it also imposes a requirement to disclose income reports to shareholders and the public, with quarterly reporting. With Elon Musk proposal, it is unsure how accurate and promising this decision is for stakeholders.
In 2018, he had considered taking Tesla private, citing “wild swings” in stock prices and short-term earnings incentives as reasons for his decision. Following shareholder comments, Musk announced less than three weeks later that Tesla would remain public.
Musk has regularly announced Tesla deadlines that the business has missed. Elon Musk admitted that he is bad at estimating dates.
Musks’ big ideas for Twitter
In Twitterverse, new features can disappear as fast as they come, and it’s tough to make everybody happy. Remember Fleets?
The edit button, which Twitter says was in the works before Musk teased it in a public poll, has become a secret conversation. With an edit button, authors could edit their posts after they have been retweeted and change the message retweeters meant to convey.
Musk has shown a longing at his companies for testing new hardware and features before they’re fully cooked, taking risks that other companies’ legal and management teams might trash.
Reduced content moderation is a substantial change to the way users will experience Twitter. And it’s a change Musk has tweeted quite a bit about, using free speech as the anchor. In fact, some of his tweets indicate an inclination toward relaxing Twitter’s current content moderation policies in favour of his interpretation of free speech.
Less content moderation to promote free speech is argued to bring back content that encouraged harassment, misinformation, and what Twitter refers to as “hateful conduct.”
Twitter Circle, the app’s version on Instagram’s “Close Friends” feature, is now available to try out.
The feature was advertised as one of many prospective product enhancements, and thanks to a bug, it became live on the site last month. As the tool approaches a live testing phase, a select number of users will only be able to access this feature to their 150 closest pals.
According to Twitter, the feature is still in its early phases, hence its limited accessibility. Although, everyone can view tweets of selected users as long as they are in their Circle. This feature suggests you only add mutual friends.
Twitter Circle attendees can be removed and according to the platform, these users will not be notified. However, unlike Google+ Circles (RIP), you only get one Circle.
Encrypted DMs (Direct Messages) is the only one Musk provides specific details for. And he did so in a tweet:
Twitter had worked on such a feature, but may have let it go.
End-to-end encrypted DMs would be a boon for privacy on the bird app. It would offer a secure method of communication between Twitter users in which only the sender and their intended recipient can read the messages sent.
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