Report: Twitter Nearing Deal With Elon Musk to Sell for $54.20 Per Share in Cash
It’s not a guarantee it will happen today, this week, or ever.
The Wall Street Journal reported on Sunday that Twitter is re-examining Elon Musk’s offer to buy the social media platform.
Reuters came out Monday morning saying that Twitter is close to accepting Musk’s offer to buy the platform for $54.20 per share in cash:
Twitter may announce the $43 billion deal later on Monday once its board has met to recommend the transaction to Twitter shareholders, the sources said. It is always possible that the deal collapses at the last minute, the sources added.
Twitter has not been able to secure so far a ‘go-shop’ provision under its agreement with Musk that would allow it to solicit other bids from potential acquirers once the deal is signed, the sources said. Still, Twitter would be allowed to accept an offer from another party by paying Musk a break-up fee, the sources added.
Elon Musk and Twitter have had a dramatic April:
- Elon Musk Buys 9% Stake in Twitter Valued Around $3 Billion
- Elon Musk Won’t Join Twitter’s Board of Directors, Amends Filing to Become Active Investor
- Elon Musk Offers to Buy Twitter for $43 Billion: ‘Best and Final Offer’
- Twitter Board Adopts ‘Poison Pill’ to Stop Elon Musk From Increasing His Stake
- Elon Musk Lines up $46.5 Billion in Financing, Exploring Tender Offer for Twitter
The last article sheds light on why Twitter might have changed its mind. Musk said he is exploring a tender offer to acquire Twitter shares from shareholders. He also lined up $46.5 billion in financing.
Musk has $25 billion in debt financing from Morgan Stanley, Barclays, Bank of America, BNP Paribas, Mizuho Bank, MUFG, and Société Générale. His shares in Tesla secure about half that amount.
Musk is also committing $21 billion in equity himself. A source told The Wall Street Journal he might bring in an equity partner.
But remember Musk will have a hard time navigating around the poison pill, which means his stakes cannot go over 15%.
People told WSJ the two sides met on Sunday after Musk met with several shareholders on Friday:
Twitter is expected to weigh in on the bid when it reports first-quarter earnings Thursday, if not sooner, the people said. Twitter’s response won’t necessarily be black-and-white, and could leave the door open for inviting other bidders or negotiating with Mr. Musk on terms other than price. Mr. Musk reiterated to Twitter’s chairman Bret Taylor in recent days that he won’t budge from his offer of $54.20-a-share, the people said.
The potential turnabout on Twitter’s part comes after Mr. Musk met privately Friday with several shareholders of the company to extol the virtues of his proposal while repeating that the board has a “yes-or-no” decision to make, according to people familiar with the matter. He also pledged to solve the free-speech issues he sees as plaguing the platform and the country more broadly, whether his bid succeeds or not, they said.
Reuters reported that the meeting happened because of pressure from shareholders who don’t want the board “to let the opportunity for a deal slip away.”
Another source said the board worried that “unless it sought to negotiate a deal with Musk, many shareholders could back him in a tender offer.” So even though the board still has the poison pill they could look bad by “going against the will of many of its investors.”
Active long-term shareholders likely want a higher price. The short-term investors say take the deal:
Short term-minded investors such as hedge funds want Twitter to accept Musk’s offer or ask for only a small increase, the sources said. Some of these are fretting that a recent plunge in the value of technology stocks amid concerns over inflation and an economic slowdown makes it unlikely Twitter will be able to deliver more value for itself anytime soon, the sources added.
“I would say, take the $54.20 a share and be done with it,” said Sahm Adrangi, portfolio manager at Kerrisdale Capital Management, a hedge fund that owns 1.13 million shares in Twitter, or 0.15% of the company, and has been an investor since early 2020.
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That last bit is interesting — $54.20 may have seemed low yesterday but if the market correction continues it’s going to be the highest offer Twitter shareholders see for a long time. If the board talks them out of it and the shares are — say — $25 in November, there will be a lot of unhappy investors.
Yes, $54.20. As we all know, 4/20 is the birthday of Adolph Hitler. Clearly this is a dog-whistle to nazis everywhere to come join Twitter! /sarc
The significance of this offer will be seen with the passage of time
So, when you think about it, there is great significance to the passage of time—especially as it passes you by while you’re just sitting there wondering what happened and Musk is in the driver’s seat smiling like a cheshire cat.
4/20 is my sons birthday, always pissed me off
Job 1 if it goes through, is making sure the executives of the company are accountable to the shareholder(s).
With a board led by someone who owns virtually no stock in it, Twitter has been effectively rudderless. That’s how wokeness takes over.
Muskis playing 3-D chess and the others are playing checkers. There is much joy when those who think they are really smart discover that they really aren’t.
Twitter is just going through the motions. Negotiating to try to show that they really tried to come to a deal with Musk but, gee whiz golly, we just couldn’t get it done. Musk will need to go around the board. So any thoughts on whether Gab or Parlor are quaking in their boots over Twitter being bought by Musk?
“Twitter is just going through the motions.”
Kind of. They are trying to get Musk to agree to a process that will delay the inevitable. If they try to argue that they need more time to purportedly allow offers by more bidders. If there were more bidders, I would think they would have expressed interest already… or are already working with Musk on this deal. That is why Musk wants a provision to pay him a break-up should they accept another offer.
So far, Musk is sticking to his original offer and the board has not indicated they will be negotiating in good faith. Okay, so Musk and friends sell out and crush the stock in a horrible stock market sell-off. Shareholder lawsuits!!!! I hope they do reject Musk’s bid. I can’t wait to see governments suing the board and their members individually on behalf of the government employee pensions. And the mutual fund companies are quickly lining up to pile on.
I expect this will be over soon.
“I expect this will be over soon.”
Is the ink dry?
“But remember Musk will have a hard time navigating around the poison pill, which means his stakes cannot go over 15%.
They are negotiating Musk buying the entire company, every share. I really doubt the “poison pill” will be an issue. It’s not a law, it’s a temporary impediment to a hostile takeover that can be removed. Musk’s takeover bid is only hostile to the board, not to the shareholders and it’s the shareholders who are driving the board to the negotiating table.
The “poison pill” only applied to attempts to acquire more than 15% stake in the company without obtaining permission from the board–basically forcing Musk to deal with the board in order to avoid its provisions. It looks like the board is potentially going to accept Musks bid so the issue of the poison pill is mute.
….moot, not mute 🙂
At some point, the board has to be accountable for why it is in the best interest of shareholders to retain the poison pill if that impedes a deal the shareholders are otherwise interest in pursuing. As things stand, the threat of the poison pill buys the board time to shop for a white knight. The prospects of not approving the tender only appear viable for the board if there is no other competing offer.
If I had Twitter I would be gleefully scrolling through all the “literally shaking” tweets that are probably flooding the platform right now.
Fucking love it.
I assume the terms of the deal include rescinding the poison pill.