Elon Musk has made an offer to buy Twitter, and it is not a hostile takeover. For a long time, Twitter continuously declined Musk's offer. However, there has been an abrupt shift in the decision of Twitter's board.
April 4, Musk reportedly bought 9.2% of shares in Twitter. For a short while, this allowed Musk to be the largest shareholder in the company.
Twitter CEO Parag Agrawal then announced his invitation to Elon Musk to join the company's board.
At first, Musk agreed to join the board of the company. However, he quickly took it back as this move would restrict him to owning just 15% of Twitter.
Twitter To Negotiate With Elon Musk
On April 14, it was revealed to the public that Elon wants to purchase the remaining shares of the company at $54.20 a share, which equals around $43 billion. The Tesla and SpaceX CEO stated that this offer is his best and final offer.
For a long time, Twitter decided to decline this offer. However, there has been an abrupt shift in the decision of Twitter's board. This comes after Tesla CEO Elon Musk confirmed $46.5 billion in financing in a regulatory filing earlier this week, demonstrating that he has secured funding agreements from banks and other entities.
It also comes after Musk held a private meeting with shareholders on Friday to continue to make his pitch for the acquisition and to stress the importance of the board of directors making a decision.
Twitter intends to address the bid during its first-quarter earnings call, which will take place no later than Thursday.
Elon Musk's Twitter Acquisition
According to the Business Insider, there is still no guarantee that Twitter will agree to Musk's terms, and the decision will partly depend on whether the company's own valuation is consistent with Musk's offer, which values Twitter at approximately $43 billion.
Some Twitter shareholders have pressed the company's board of directors to negotiate with Musk, despite the fact that Musk explicitly stated in his offer letter that the $54.20-per-share figure was his "best and final offer."
Twitter responded to Musk's buy offer by adapting a strategy called a "poison pill" defense to resist a hostile takeover.
A poison pill is a corporate strategy for thwarting an undesired takeover. A "Limited Duration Stockholders Rights" plan is another name for it.
In the 1980s, corporate law firms devised a strategy to protect client companies from unwanted acquisitions by increasing the number of shares required for a takeover. It's viewed as a last-ditch effort because it dilutes shareholder value and has the potential to cause significant collateral damage.
As previously reported, during TED 2022 in Vancouver, Elon Musk admitted, "I am not sure that I will actually be able to acquire it."
He stated in addition that in the event that his bid for Twitter is rejected, he has a "Plan B" to proceed with a larger stake in the social media company. Although he has provided no further details on what that might entail.
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