Here's how much Twitter shareholders will get after Elon Musk's $44bn offer
Elon Musk has finally acquired Twitter for $44bn, with its co-founder Jack Dorsey throwing his weight behind the Tesla chief.
Given that Twitter is a publicly-traded company, there are many investors who hold shares of the micro-blogging site. Now, with Elon Musk taking over Twitter, and his proposition to take the company private, these investors will be given multimillion-dollar payouts, while staff could also share a $1bn windfall if stock options pay out.
Whenever a publicly-traded company is proposed to be taken private, the buyer offers to purchase publicly held shares at a premium. Hence, Musk offered $54.20 per share even though Twitter is currently trading under $52.
Let's look at how much shareholders, staff, the executives, including CEO Parag Agarwal, would get once the transaction is complete.
Twitter’s co-founder Jack Dorsey
Twitter’s co-founder Jack Dorsey is set to collect almost $1bn in cash once the deal finalises. Dorsey, who stepped down as chief executive last year after pressure from activist investor Elliott Management, still owns 18 million shares, or almost 2.4 per cent of its stock, worth $978m at Musk’s agreed offer of $54.20.
(Photograph:Reuters)
(L) Martha Lane Fox, (M) Robert Zoellick and Omid Kordestani
Other board members will also be paid handsomely as they too hold shares. According to the Guardian, Dotcom pioneer Martha Lane Fox has 32,545 shares which would be worth $1.7m, while Robert Zoellick, the former US deputy secretary of state and ex-president of the World Bank, would get $1.1m.
Twitter’s former executive chairman, Omid Kordestani, would receive over $50m, based on his holding of 934,247 shares.
Current chair Bret Taylor’s stake would be worth around $3m at Musk’s price.
(Photograph:Agencies)
Cash-rich executives
Current CEO Parag Agrawal, would collect payouts if Musk ends their employment, triggering the accelerated vesting of shares awarded as restricted stock units (a form of compensation and performance-related pay popular in Silicon Valley).
Agrawal would receive a $38.7m package if his tenure ends through a change in control (CiC) event, such as the company being taken private, a proxy statement filed this month with the SEC shows, according to the Guardian.
Ned Segal, Twitter’s chief financial officer, would receive a $25.5m payoff if his position was terminated though a CiC, while general council Vijaya Gadde would be in line for $12.5m and the chief customer officer, Sarah Personette, would receive $11.2m.
Agrawal also owns about 128,000 Twitter shares, including some exercisable and vested stock options, the proxy filing shows, which would be worth nearly $7m at Musk’s offer, while Segal’s 394,000 shares would be worth $21m. Gadde’s 600,000 shares would be valued at $32m, and Personette’s 143,000 would be worth more than $7m.
(Photograph:Reuters)
Twitter's employees will also be rewarded
Twitter’s employees have benefited from a generous share scheme, introduced in 2013, taking as much as 50% of their earnings in stock options. About 41.7m shares can be issued in options, warrants and rights under Twitter’s equity compensation plans. Those securities would be worth over $2.2bn at Musk’s price.
But they have an average exercise price of about $27, indicating they could deliver a profit of $1bn if exercised and then cashed in at $54.20.
(Photograph:Reuters)
Institutional investors
Vanguard Group, which was one of the biggest shareholder in mid-April ahead of Musk, would receive about $4.5bn for its 10 per cent stake held by its various funds.
Another investment giant Morgan Stanley Investment Management, which is the third-largest shareholder with 8.5 per cent, worth $3.5bn, followed by BlackRock and State Street who each own 4.75 per cent, or $2bn at Musk’s price.
(Photograph:AFP)