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:
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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