Assume you're Elon Musk. You want to be the most powerful and influential person on the planet.
Elon Musk has his dream. He has his game plan. Now he just needs a team.
The billionaire entrepreneur announced late Thursday that he is acquiring the New York-based microblogging service for $45 a share. Putting the value of the deal at $44 billion.
There’s just one catch: Musk won’t be Twitter’s CEO. He said he will join the board and that he would remain Twitter’s chairman but would “not be updating” his own account.
In a tweet, Musk stated, "I believe Twitter is a rare instance of a strategic purchase that makes sense."
Musk said he plans to double the company’s engineering team and quadruple the size of the engineering team in San Francisco.
“One way or another, the traffic will grow,” he told reporters Thursday in a conference call, adding that he would reduce costs for users by increasing the efficiency of tweets.
Some top analysts expressed skepticism about Musk’s bid. They say his companies Tesla and SpaceX have burned through more than $2 billion a year.
“This was an expensive, high-risk move with virtually no profitability attached,” said Brian Wieser, an analyst with Pivotal Research Group.
Wieser says most companies lose money when they sell ads.
The deal also will require additional cash infusions from existing investors such as a $300 million infusion from DST Global, which includes Yuri Milner, Peter Thiel and Li Ka-shing.
Twitter declined to comment on its financial condition and how the deal will affect its third quarter results. The company has only said it expects to turn a profit in the fourth quarter.
It’s not the first time that Musk has bought a struggling tech company.
The 46-year-old tech entrepreneur is chairman and chief executive of electric car maker Tesla Motors. He’s also head of space exploration company SpaceX, which is developing reusable rockets.
Shares of Twitter jumped nearly 9% Thursday on the news, closing at $45.01.
Twitter reported last week that the number of people using the service declined for the second straight quarter. The company has struggled to reignite growth and its stock has been battered since May, when it first reported a big drop in user numbers.
At that time, the company also announced it was cutting more than 330 jobs and laying off another 8 percent of its work force.
The stock price has plunged from $69 in February to $26, or less than half of its high.
Twitter has long been hailed as the quintessential startup. It was born out of a high-tech hobby for cofounders Jack Dorsey and Evan Williams, and funded by venture capitalists, including Accel Partners.
But the company hit a few bumps. Dorsey was booted as chief executive in 2008 after a clash with investors.
He returned as interim CEO in July 2011 but was asked to leave the company in early 2013.
The combined assets of Twitter and Musk’s companies will make Twitter a more lucrative business.
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