A week later when Twitter used the ‘poison pill’ to thwart Elon Musk’s plan To take over the micro-blogging site, the Tesla CEO said he has arranged USD 46.5 billion to buy out the social media company. He has raised the funds from Morgan Stanley, Barclays, and Bank of America, in the form of both equity and debt. Here’s what is the possible way ahead.
Elon Musk’s Offer To Take Over Twitter
Musk has already made an offer to buy Twitter Inc. The world’s richest man is willing to pay USD 43 billion for the company’s entire stake. He will shell out USD 54.20 per share in cash, a 54 per cent premium over the January 28 closing price, according to a filing with the US Securities and Exchange Commission. “My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,” he wrote.
Musk holds a passive stake of 9.2 per cent in the micro-blogging platform, according to a US SEC (Securities and Exchange Commission) filing earlier this month. In the filing, Twitter Inc also disclosed that Elon Musk owns Twitter shares numbering 73,486,938 as shares of common stock in his personal capacity.
The Twitter Response
After the Tesla CEO disclosed his shareholding in Twitter, the social media company said it is appointing Musk to its board. “I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board,” Twitter CEO Parag Agrawal had said in a tweet. The offer to join the Twitter board was declined by Musk.
Following this, the billionaire offered to buy Twitter for USD 43 billion. Subsequently, the board adopted a one-year ‘poison pill’ last week that prevents Musk from owning more than 15 per cent of the company without its consent, winning itself some time.
The Way Ahead
Now that Musk has arranged the funds required, that too from reputed banks, analysts said the Twitter board will not be able to ignore his offer. Jacob Asset Management Chief Investment Officer Ryan Jacob, which holds Twitter shares, told Reuters that Musk’s latest filing will push Twitter’s board to respond. “They had to consider the seriousness of the offer, and this filing may do that,” he said. “It’s going to be hard for them to ignore it,” he added.
A Twitter representative also told Reuters that the board is committed to conducting a careful, comprehensive, and deliberate review to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders.
The Tesla CEO is also expected to raise his offer amount, which may prompt Twitter to consider the case. “You have to go a little higher than your M&A (merger and acquisition) price. That’s what really drives the smaller shareholders to tender their shares,” Bloomberg Intelligence analyst Mandeep Singh said.
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