Twitter Re-Examines Elon Musk’s Bid, May Be More Receptive to a Deal

Twitter Inc.

TWTR 3.93%

is re-examining

Elon Musk’s

$43 billion takeover supply after the billionaire lined up financing for the bid, in a signal the social-media firm may very well be extra receptive to a deal.

Twitter had been anticipated to rebuff the offer, which Mr. Musk made earlier this month with out saying how he would pay for it. But after he disclosed final week that he now has $46.5 billion in financing, Twitter is taking a contemporary have a look at the supply and is extra probably than earlier than to search to negotiate, folks acquainted with the matter mentioned. The state of affairs is fast-moving and it’s nonetheless removed from assured Twitter will accomplish that.

Twitter remains to be engaged on an all-important estimate of its personal worth, which would wish to are available shut to Mr. Musk’s supply, and it might additionally insist on sweeteners corresponding to Mr. Musk agreeing to cowl breakup protections ought to the deal collapse, a number of the folks mentioned.

The two sides are assembly Sunday to talk about Mr. Musk’s proposal, the folks mentioned.

Twitter is predicted to weigh in on the bid when it stories first-quarter earnings Thursday, if not sooner, the folks mentioned. Twitter’s response received’t essentially be black-and-white, and will depart the door open for inviting different bidders or negotiating with Mr. Musk on phrases aside from worth. Mr. Musk reiterated to Twitter’s chairman

Bret Taylor

in latest days that he received’t budge from his supply of $54.20-a-share, the folks mentioned.

The potential turnabout on Twitter’s half comes after Mr. Musk met privately Friday with a number of shareholders of the corporate to extol the virtues of his proposal whereas repeating that the board has a “yes-or-no” determination to make, in accordance to folks acquainted with the matter. He additionally pledged to resolve the free-speech points he sees as plaguing the platform and the nation extra broadly, whether or not his bid succeeds or not, they mentioned.


Tesla Inc.

TSLA -0.37%

chief government made his pitch to choose shareholders in a sequence of video calls, with a deal with actively managed funds, the folks mentioned, in hopes that they might sway the corporate’s determination.

Mr. Musk mentioned he sees no approach Twitter administration can get the inventory to his supply worth by itself, given the problems within the enterprise and a persistent incapacity to right them. It couldn’t be discovered if he detailed particular steps he would take, although he has tweeted about wanting to reduce the platform’s reliance on advertising, in addition to to make easier adjustments corresponding to permitting longer tweets.

Mr. Musk already has some shareholders rallying behind him following the conferences. Lauri Brunner, who manages Thrivent Asset Management LLC’s large-cap progress fund, sees Mr. Musk as a expert operator. “He has a longtime monitor report at Tesla,” she mentioned. “He is the catalyst to ship robust working efficiency at Twitter.” Minneapolis-based Thrivent has a roughly 0.4% stake in Twitter value $160 million and can also be a Tesla shareholder.

Mr. Musk already has mentioned he’s contemplating taking his bid instantly to shareholders by launching a tender supply. Even if he was to get vital shareholder help in a tender supply—which is way from assured—he would still need a way around the corporate’s poison capsule, a authorized maneuver it employed that successfully blocks him from constructing his stake to 15% or extra.

Elon Musk already has mentioned he’s contemplating taking his bid instantly to shareholders by launching a tender supply.


Miguel Roberts/The Brownsville Herald/Associated Press

One oft-employed tactic to push a bid, searching for to achieve management of the goal’s board, is out of attain for now. Twitter’s administrators have staggered phrases, which means a dissident shareholder would wish a number of years to achieve management somewhat than a single shareholder vote. Twitter tried final 12 months to part out the staggered board phrases on condition that they’re frowned upon by the corporate-governance group, however not sufficient shareholders voted on the measure. The firm is trying to accomplish that once more at this 12 months’s annual assembly set for May 25. Only two administrators are up for re-election, and it’s too late for Mr. Musk to nominate his personal.

Twitter’s shares have been buying and selling beneath his supply worth since he made the bid April 14, usually a signal that shareholders are skeptical a deal will occur, although they did shut up roughly 4% Friday at $48.93, the day after he unveiled financing for the deal. He has indicated that if the present bid fails, he might promote his stake, of greater than 9%.

The financing included greater than $25 billion in debt coming from almost each international blue-chip funding financial institution other than the 2 advising Twitter. The the rest was $21 billion in fairness Mr. Musk would supply himself, probably by promoting present stakes in his different companies corresponding to Tesla. The pace at which the financing got here collectively and the market selloff in latest days—which makes the all-cash supply look comparatively extra engaging—probably contributed to Twitter’s larger willingness to entertain Mr. Musk’s proposal.

As Elon Musk makes an attempt to purchase Twitter, WSJ seems again at Twitter’s previous suitors, like Salesforce, Disney and Alphabet. Tech reporter Tim Higgins explains why these previous conversations fell via and what’s completely different this time. Illustration: Nikki Walker

Twitter’s board ought to have interaction with Mr. Musk since its inventory has “gone nowhere” for the reason that firm went public eight years in the past, mentioned

Jeff Gramm,

a portfolio supervisor with Bandera Partners LLC, a New York hedge fund with about $385 million beneath administration. The agency final purchased Twitter shares in February and owns about 950,000 general, which accounts for about 11% of its portfolio.

Mr. Gramm mentioned Twitter’s board can’t stroll away from Mr. Musk’s supply with out offering another that offers actual worth to shareholders. “I’m unsure what that may be at this stage in addition to discovering a greater bid,” he mentioned.

Write to Cara Lombardo at [email protected]

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