Elon Musk’s Offer: People familiar with the situation said on Sunday that Twitter Inc is facing increasing pressure from its shareholders to negotiate with Elon Musk, despite the fact that the world’s richest man has termed his $43 billion proposals for the social media platform his best and final offer.
While Twitter shareholders’ opinions on a reasonable price for a sale differ, several contacted the business after Elon Musk announced his acquisition funding proposal on Thursday, urging it not to let the opportunity for a deal pass them by, according to people who spoke on the condition of anonymity.
By the time Twitter releases quarterly earnings on Thursday, the board of directors is anticipated to conclude that Elon Musk’s all-cash $54.20 per share bid for the firm is too low. Nonetheless, some shareholders who agree with that position want Twitter to pursue a greater offer from Elon Musk, whose net worth is estimated to be $270 billion by Forbes, according to the sources.
One option open to Twitter’s board is to open its books to Elon Musk in an attempt to persuade him to lower his offer. Another option is to ask for bids from other possible bidders. While it is unclear which path Twitter will pursue, sources say it is increasingly probable that the company’s board will try to entice Elon Musk to make a stronger offer while rejecting the present one.
“I wouldn’t be surprised if Mr. Musk raises what he called his best and final offer to maybe $64.20 per share next week,” one of the Twitter fund managers said on the condition of anonymity to discuss private conversations with the firm. “He might possibly abandon the project totally. Everything is conceivable “Elon Musk’s offer, according to the fund management. On Friday, Twitter shares closed at $48.93, a considerable discount from Mr. Musk’s offer, reflecting the uncertainty around his bid’s success.
Twitter implemented a poison bill to prevent Elon Musk from expanding
Following Mr. Musk’s approach, Twitter implemented a poison pill to prevent him from expanding his more than 9% ownership in the company above 15% without first reaching an agreement with the board. Mr. Musk has responded by threatening to launch a tender offer in order to get Twitter shareholder approval for his purchase.
According to the sources, one concern that Twitter’s board is considering is that unless it seeks to negotiate a deal with Elon Musk, many shareholders may back him in a tender offer. While the poison pill would prohibit Twitter shareholders from tendering their shares, the firm is concerned that if it is revealed to be going against the wishes of many of its investors, its negotiating position would be significantly weakened, according to the sources.
Since announcing his offer on April 14, Mr. Musk, the CEO of electric carmaker Tesla Inc., has been visiting with Twitter shareholders to seek support for his proposal. Elon Musk has stated that in order for Twitter to thrive and become a genuine platform for free speech, it must be turned private.
Twitter and Elon Musk’s representatives did not immediately reply to calls for comment. Some of Elon Musk’s talks with Twitter shareholders were reported by the Wall Street Journal earlier on Sunday. According to the newspaper, Mr. Musk and Twitter will meet on Sunday to discuss the acquisition bid.
Intrinsic worth
According to the sources, Twitter shareholders’ price expectations for the acquisition differ substantially based on their investing style. According to the sources, active long-term shareholders, who combined with index funds own the majority of the Twitter stock, have greater price expectations, with some in the $60s per share. They’re also more likely to give Parag Agrawal, who took over as Twitter’s CEO in November, more time to improve the stock’s value, according to the sources.
On April 14, Saudi Arabia’s Prince Alwaleed bin Talal, a Twitter stakeholder, stated, “I don’t feel that Elon Musk’s suggested offer ($54.20 per share) comes near to the fundamental worth of Twitter given its growth possibilities.”
According to the sources, short-term investors such as hedge funds want Twitter to accept Elon Musk’s offer or seek only a tiny increase. According to the sources, some of them are concerned that a recent drop in the value of technology companies due to fears about inflation and an economic downturn makes it doubtful that Twitter will be able to deliver additional value to itself anytime soon.
“Take $54.20 per share and be done with it,” said Sahm Adrangi, portfolio manager at Kerrisdale Capital Management, a hedge fund that holds 1.13 million shares in Twitter, or 0.15 percent of the firm, and has been an investor since early 2020.
According to the people, Elon Musk’s offer did not appear to convert his army of Twitter followers into new owners in the San Francisco-based company who could 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 Elon Musk announced his position on April 4 to around 22%.