Twitter is closing an agreement to sell itself to Elon Musk, according to two individuals familiar with the situation, a move that would bring the world’s richest man together with the influential social networking service. According to the sources, an agreement might be revealed as soon as Monday.
According to the people who spoke on the condition of anonymity because they were not authorised to discuss confidential information, Twitter’s board was negotiating with Mr. Musk into the early hours of Monday over his unsolicited bid to buy the company, after he began lining up $46.5 billion in financing for the offer last week. According to the two parties, they were negotiating issues such as a deadline for closing any prospective sale and any costs that would be paid if an agreement was signed and subsequently fell apart.
I made an offer https://t.co/VvreuPMeLu— Elon Musk (@elonmusk) April 14, 2022
According to the sources, the negotiations came after a Twitter board meeting on Sunday morning to examine Mr. Musk’s offer. Obtaining funding commitments was a watershed moment in how the board regarded Mr. Musk’s proposal of $54.20 per share, allowing the company’s 11 board members to seriously examine his offer, according to the sources.
On Monday, Twitter’s shares started 4% higher, at over $51 per share.
An agreement is not yet complete and might yet fall apart, but what looked to be a highly unusual accord appeared to be nearing completion. According to sources with knowledge of the matter, the scenario involving Twitter and Mr Musk remains fluid and fast-moving.
Mr Musk, who has over 83 million Twitter followers and began collecting shares in the firm early this year, disclosed his ambition to acquire the company and take it private on April 14. However, Wall Street promptly ignored his idea since it was uncertain whether he could come up with the money to complete the transaction. Twitter has implemented a “poison pill,” a defensive strategy designed to prevent Mr. Musk from acquiring more of the company’s equity.
Mr Musk amended his proposal last week, increasing pressure on Twitter to take his offer more seriously. Mr. Musk revealed his funding from the investment bank Morgan Stanley and a group of other lenders in a securities filing made public on Thursday, providing $13 billion in debt financing, plus another $12.5 billion in loans against his equity in Tesla, the electric carmaker he oversees. He stated that he will use an additional $21 billion in cash to purchase the remainder of Twitter’s ownership.
A spokeswoman for Twitter declined to comment. Previously, the firm stated that its board was “continue to conduct a thoughtful, comprehensive, and deliberate examination to decide the course of action in the best interest of the company and all Twitter investors.”
Mr Musk did not reply to a comment request. The Wall Street Journal previously reported Twitter’s growing openness to Mr Musk’s proposal.
The openness of Twitter’s board to Mr. Musk’s bid was likely viewed by Wall Street as “the beginning of the end for Twitter as a public company, with Musk likely now on a path to acquire the company unless a second bidder comes into the mix,” Dan Ives, an analyst at Wedbush Securities, wrote in a note on Sunday.
Mr. Musk’s bid for Twitter represents a 54% premium over the share price the day before he began investing in the firm in late January. However, for much of last year, Twitter’s stock traded higher than Mr. Musk’s proposal.
Several observers predicted that Twitter’s board would only approve a proposal worth at least $60 per share. Twitter’s stock climbed above $70 per share last year when the business declared plans to quadruple its revenue but has since slumped to approximately $48 as investors questioned the company’s capacity to reach those ambitions.
Mr. Musk, 50, has stated that he sees several flaws with Twitter as a social media site. He has stated that he wishes to “transform” the firm into a “platform for free expression throughout the world,” and that this will necessitate significant modifications in its product and rules.
Mr. Musk has attempted to bargain with Twitter through the service, saying in multiple tweets that he may take his bid straight to the company’s shareholders in what is known as a “tender offer.” A tender offer is a hostile move in which an outside party bypasses a company’s board of directors by requesting shareholders to sell their shares to them directly.
He has also behaved strangely on the site, prompting questions about how he will govern the service if he is put in charge. Mr. Musk took aim at billionaire Bill Gates on Saturday, claiming that Mr. Gates had taken a “short” position in Tesla stock, which implied that Mr. Gates was wagering that the carmaker’s shares would decline. Mr. Musk tweeted on Sunday that he was “moving on” from making fun of Mr. Gates.
Nonetheless, Mr. Musk maintains cordial relations with certain high-ranking Twitter executives. Mr. Musk exchanged cordial tweets with Jack Dorsey, the company’s co-founder and board member, over the weekend. Mr. Dorsey stood down as Twitter’s CEO in November and will shortly leave the company’s board of directors.
Both guys hold similar views on cryptocurrencies and the need of encouraging more free expression online. Mr. Dorsey wrote, “I’m incredibly thrilled Elon is joining the Twitter board!” when Mr. Musk toyed with joining the company’s board earlier this month. He is very concerned about our planet and Twitter’s role in it.”
Mr. Dorsey’s financial services startup, Block, announced on Friday that he had altered his position from chief executive to “Block Head.” That adjustment appears to have struck a chord with Mr. Musk.