Twitter reconsidering Elon Musk’s bid may be more receptive to a deal

Twitter Inc.

TWTR 3.93%

reconsidering Elon Musk’s $ 43 billion takeover bid after the billionaire ran to fund the bid, as a sign that the company could be more receptive to a deal on social media.

It was expected that Twitter would reject the offer, which Mr Musk made earlier this month, without saying how he would pay for it. But after revealing last week that he now has $ 46.5 billion in funding, Twitter is looking at the offer again and is more likely than before to seek to negotiate, people with knowledge of the matter said. The situation is moving fast and it is still far from guaranteed that Twitter will do so.

Twitter is still working on an all-important estimate of its own value, which should come close to Mr Musk’s offer, and it could also insist that sweeteners like Mr Musk agree to cover breach protection if the deal falls apart, some of the folks said. .

The two sides meet on Sunday to discuss Mr. Musk’s proposal, the people said.

Twitter is expected to weigh in on the bid when it reports first-quarter earnings on Thursday, if not sooner, people said. Twitter’s response will not necessarily be black and white and may leave the door open to invite other bidders or negotiate with Mr. Musk on terms other than the price. Musk reiterated to Twitter chairman Bret Taylor in recent days that he will not deviate from his $ 54.20-per-dollar offer. share, the people said.

The potential turnaround on Twitter comes after Mr Musk met privately on Friday with several shareholders in the company to celebrate the benefits of his proposal, while reiterating that the board has a “yes-or-no” decision to make , according to people familiar with the matter. He also promised to address the issues of free speech that he sees as plaguing the platform and the country more broadly, whether his bid succeeds or not, they said.

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CEO made his proposal to select shareholders in a series of video calls focusing on actively managed funds, the people said, hoping they could influence the company’s decision.

Mr. Musk said he sees no way Twitter management can get the stock at its offer price on its own, given the problems in the industry and a persistent inability to fix them. It could not be learned if he detailed specific steps he would take, although he has tweeted about wanting to reduce the platform’s reliance on advertising, as well as making simpler changes, such as allowing longer tweets.

Sir. Musk already has some shareholders gathering behind it after the meetings. Lauri Brunner, who manages Thrivent Asset Management LLC’s growth fund with large companies, sees Mr Musk as a skilled operator. “He has an established track record at Tesla,” she said. “He is the catalyst for delivering strong operating results on Twitter.” The Minneapolis-based Thrivent has a $ 0.4 million stake in Twitter worth $ 160 million and is also a Tesla shareholder.

Mr. Musk has already said he is considering taking his bid directly to shareholders by launching a takeover bid. Even if he were to receive significant shareholder support in a takeover bid – which is far from guaranteed – he would still need a way around the company’s poison pill, a legal maneuver that it used that effectively blocks him from building his stake to 15%. or more .

Elon Musk has already said he is considering taking his bid directly to shareholders by launching a takeover bid.


Miguel Roberts / The Brownsville Herald / Associated Press

A frequently used tactic to push a bidder seeking to gain control of the target board is out of reach for now. Twitter’s directors have staggered terms, meaning a dissident shareholder would need several years to gain control instead of a single shareholder vote. Twitter tried last year to phase out the staggered board terms, as they are frowned upon by the corporate-governance community, but not enough shareholders voted on the measure. The company is trying to do that again at this year’s annual meeting, which is set for May 25th. Only two directors are up for election, and it’s too late for Mr Musk to nominate his own.

Twitter shares have been trading below its bid price since making the bid on April 14, typically a sign that shareholders are skeptical that a deal will happen even though they closed around 4% on Friday at $ 48.93, the day after he revealed the financing of the deal. . He has indicated that if the current bid fails, he could sell his stake of more than 9%.

The financing included more than $ 25 billion in debt from almost all global investment banks, with the exception of the two advisory Twitter. The rest was $ 21 billion in equity that Mr. Musk would raise himself, probably by selling existing shares in his other companies, such as Tesla. The speed with which the financing came together and the market sales in recent days – which makes the offer of cash look relatively more attractive – have probably contributed to Twitter’s greater willingness to entertain Mr Musk’s proposal.

As Elon Musk tries to buy Twitter, WSJ looks back at Twitter’s former suitors, such as Salesforce, Disney and Alphabet. Technical reporter Tim Higgins explains why the previous conversations fell through and what is different this time. Illustration: Nikki Walker

Twitter’s board should engage with Mr. Musk, as the stock has “gone nowhere” since the company was listed eight years ago, said Jeff Gramm, a portfolio manager at Bandera Partners LLC, a New York hedge fund with about $ 385 million under management. The company last bought Twitter shares in February and owns about 950,000 in total, accounting for about 11% of its portfolio.

Sir. Gramm said Twitter’s board can not walk away from Mr. Musk’s offer without offering an alternative that provides real value to shareholders. “I’m not sure what it might be at the moment besides finding a higher bid,” he said.

Write to Cara Lombardo at

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