The South African billionaire Elon Musk, owner of Tesla and SpaceX, announced the purchase of Twitter for US$ 44 billion this Monday (25). With this, the company will no longer be publicly traded, with shares on the stock exchange, to be closed capital, that is, without shares traded on the stock exchange.
Musk wants to take Twitter private in order to carry out the changes he considers important in the company, according to a letter he sent to the SEC (Securities and Exchange Commission), the capital market regulator in the United States, corresponding to the CVM (Commission of Securities) in Brazil. Since 2013, the company has been traded on Nasdaq in New York.
O UOL listened to experts to explain what changes when a company becomes privately held. See below.
In addition to not having shares traded on the stock exchange, the main changes are Musk’s own autonomy to decide on the company’s future and the end of the requirement to disclose constant financial statements.
Musk will have autonomy to make decisions
“Musk will be able to define the direction of the company without having to have the approval of other shareholders or the board of directors. He will also be able to appoint the company’s executive board”, says Marcos Roberto de Moraes Manoel, a lawyer specializing in capital markets.
Musk’s intentions about the company’s future are unclear. The billionaire has said several times that he seeks more freedom of expression and that the social network must not regulate content beyond what is required by law. But he did not detail what this will change in practice.
He has also mentioned new features of the platform, such as the creation of a button to edit already published tweets. He suggested that tweets can be edited for a short time after publication. When edited, the shares (retweets) would be zeroed, Musk said.
The billionaire also stated that he will try to “defeat” spam bots, increase the character limit per tweet (today it is 280 characters) and create an open source algorithm.
In practice, this means that the network would make public the calculation that determines what appears in a person’s Twitter feed. So far, the billionaire has not presented any economic strategy for the company.
“Now Twitter will have an owner, who will be responsible for dictating the rules of the game. We need to see how people’s acceptance will be”, says Marcelo Oliveira, CFA and founder of Quantzed, a technology and financial education company for investors. .
Fewer rules and costs with balance sheets and audits
Public companies must comply with a series of requirements determined by the SEC to continue trading on the stock exchange, such as disclosing periodic balance sheets, conducting external audits, prioritizing investor interests and ensuring good governance. All of this involves costs.
Thus, a privately held company has lower costs, says Virgilio Lage, a specialist at Valor Investimentos.
In addition to not needing to report the company’s results to the public, the capital company can only carry out an internal audit, for example.
By taking Twitter private, Musk avoids having to deal with the SEC, a body with which he has had friction in the past, over tweets about his other company, Tesla.
The SEC investigates a tweet by Musk from November 2021, in which he asks his followers whether he should sell 10% of his stake in Tesla. In 2018, the regulator reached an agreement for Musk to have some of his tweets for approval before publishing, after he said in a post that he had secured a loan to take Tesla private. The SEC pointed to fraud against investors.
Twitter may enter the stock market again in the future
When Twitter ceases to be a publicly traded company, investors who own shares in the company will receive cash for them. Musk will pay US$ 54.20 per share (about R$ 270).
“The investor receives a value related to the sale of his share, which generally tends to be better than the value currently traded on the open market”, says Sidney Lima, analyst at the analysis house Top Gain. At around 12:40 pm on Tuesday, Twitter’s share on Nasdaq was quoted at $50.20.
The decision to go private is not irreversible. If Musk wants to take the company public in the future, just follow the entire process required by the SEC. It will be as if the company had never been on the stock exchange.
Negotiations lasted weeks
Musk’s purchase of Twitter comes after weeks of negotiations.
On April 4, he reported that he had purchased 9.2% of the social network’s shares, making him the company’s largest single shareholder.
At the time, the billionaire said he would be part of the board of directors (group of directors with decision-making power on the platform)
On April 14, he made the first purchase proposal, offering US$ 43 billion through the social network.
At first, Twitter’s board of directors was against the offer. It even adopted a strategy called the “poison pill” to make the acquisition difficult.
But in recent days, the businessman has given details of his proposal, such as financing obtained from Morgan Stanley, and informed that this would be his “last and best” proposal. Over the weekend, Twitter negotiated with Musk and accepted the offer.