Twitter said it was not interested in the world’s richest man Elon Musk buying it without a fight, as Musk races to secure funding for a $43 billion acquisition.
Twitter’s board of directors has made a defensive maneuver that could thwart Musk’s takeover bid, but Elon Musk still has a range of options that suggest this showdown likely isn’t over yet.
Twitter’s board said it had adopted a shareholder equity plan known as a “poison pill”, which would make it difficult for Musk (or any other potential buyer) to take over the company without board approval.
This comes as Morgan Stanley Bank, which Musk chose to manage his side of the potential deal, is inviting banks and other potential investors to support financing the offer, according to the New York Times, citing 4 sources, and Al Arabiya.net reported.
One of the sources said that Musk is focusing primarily on raising debt financing and has not yet begun seeking equity financing for his existing offering.
Tesla shares
Two sources revealed that Musk is evaluating various debt packages, including more large debt known as “preferred debt”, as well as a loan against his Tesla shares.
The “poison pill” plan came a day after Musk made an offer to acquire all of the shares he did not own on the site for $54.20 per share, valuing the company at about $41 billion, a 38% premium to Twitter’s closing price the day before. To reveal a large mask share.
The “poison pill” plan will remain in place for about a year and will be activated if Musk increases his stake in the company to 15%, he currently owns about 9% of the stock.
This plan gives all other shareholders the right to buy one additional share for each share they own at a discount, so while the other shareholders would have to pay $210 for each new share, Musk (or any other unfriendly investor) would have to pay $420.
Musk aims to collect a fully funded bid as soon as this week, although that timeline is uncertain.
Last week, Musk, the world’s richest man, made an offer to take over the social media company, saying he wanted to turn it into a private company, with the aim of people being able to speak more freely on the platform, but Wall Street traders questioned his offer because he did not It includes details of how he got the money needed for the deal.
And if the Twitter deal is executed, as a traditional debt-financed purchase, it is likely to be the largest deal of its kind in the past two decades at least, and it will be difficult to finance it for any buyer, because Twitter does not have the financial profile that is typical for operations Debt-fueled buyouts.
tender
Media and industry experts have been following Musk for indications of his next moves, with some wondering if his love me tender tweet on Saturday was an indication that he was considering circumventing the board of directors by offering to buy shares collectively directly from other shareholders through a tender.
The bid could be another catalyst for a “poison pill,” said Eli Klein, partner and head of the merger, acquisitions and securities group at law firm Schulte, Roth & Zabel, and Musk could launch a conditional offer, making the stock sale conditional on Twitter’s board withdrawing the “poison pill.” “.
escalation
In a less friendly move, Musk could sue Twitter’s board of directors over a “poison pill”, accusing it of not acting in the best interests of shareholders, even though that will likely become a drawn-out battle.
And Elon Musk could try to keep pressure on the board from the outside to accept his deal, which he did repeatedly over the weekend.