UNITED STATES: On Sunday, Twitter Inc began talks with Elon Musk after Musk wooed several of the social media company’s shareholders with specifics on the funding of his $43 billion purchase offer.
According to the sources, the company’s decision to speak with Musk earlier on Sunday does not imply that it will accept his $54.20 per share offer. The microblogging site is now looking at the possibility of selling the firm to Musk on favorable terms.
Musk, the CEO of electric vehicle company Tesla Inc, has been visiting the Twitter shareholders in recent days to seek support for his takeover attempt. He previously stated that the microblogging site should be turned private in order to flourish and become a genuine platform for free speech.
Following Musk’s presentation of a comprehensive funding plan for his proposal on Thursday, several Twitter shareholders contacted the business, urging it not to let the opportunity for a merger pass them by.
As per the reports, Musk’s insistence that his bid for the company is his “best and final” has become a stumbling block in the transaction negotiations.
Twitter’s take on Musk’s offer
Now, Twitter’s board of directors has decided to talk to Musk to learn more about his ability to close the sale and possibly secure better terms.
The company on the other hand, has yet to decide whether it will pursue a sale in order to put pressure on Musk to increase his offer.
The American microblogging and social networking site wants to know if there are any ongoing investigations into Musk by regulators, notably the Securities and Exchange Commission (SEC), that could jeopardise the deal’s completion.
Musk, who settled claims that he misled investors by claiming four years ago that he had secured funds to take Tesla private, may have violated SEC disclosure regulations when he acquired a stake in Twitter early this year, according to securities lawyers.
The social networking site is also investigating if regulators in any of the company’s key markets might object to Musk’s ownership.
Following Musk’s approach, the social media business implemented a poison pill to prevent him from boosting his more than 9% ownership in the company above 15% without first striking an agreement with the board. Musk has responded by threatening to launch a tender offer in order to gain Twitter shareholder backing for his purchase.
Twitter’s board was concerned that if it didn’t try to work out a deal with Musk, many shareholders would back him in a tender offer.
The pricing expectations for the acquisition among Twitter shareholders vary significantly depending on their investing style.
Active long-term shareholders, who, together with index funds, own the majority of the Twitter stock, predict higher prices. They’re also more likely to give Parag Agrawal, who took over as the company’s CEO in November, more time to increase the stock’s value.
“I don’t believe that the proposed offer by Elon Musk ($54.20 per share) comes close to the intrinsic value of Twitter given its growth prospects,” Saudi Arabia’s Prince Alwaleed bin Talal, a Twitter shareholder, tweeted on April 14.
Hedge funds and other short-term investors want Twitter to accept Musk’s offer or merely seek a tiny raise.
Some of them are concerned that a recent drop in the value of technology equities, which coincided with concerns about inflation and an economic downturn, makes it doubtful that Twitter will be able to deliver additional value to itself anytime soon.
Musk’s offer did not appear to convert many of his 83 million Twitter followers into new owners in the San Francisco-based company who may support his bid, which is a silver lining for Twitter’s board.
According to the sources, Twitter’s retail investor base has grown from roughly 20% before Musk announced his position on April 4 to around 22%.
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