Twitter is nearing a deal to sell itself to Elon Musk, two people with knowledge of the situation said, a move that would unite the world’s richest man with the influential social networking service. An agreement could be announced as soon as Monday, the people said.
Twitter’s board was negotiating with Musk into the early hours of Monday over his unsolicited bid to buy the company, after he began lining up $46.5 billion in financing for the offer last week, said the people, who spoke on the condition of anonymity because they were not authorised to discuss confidential information. The two sides were discussing details including a timeline to close any potential deal and any fees that would be paid if an agreement were signed and then fell apart, they said.
The discussions followed a Twitter board meeting Sunday morning to discuss Musk’s offer, the people said. Obtaining commitments for the financing was a turning point for how the board viewed Musk’s bid of $54.20 a share, enabling the company’s 11 board members to seriously consider his offer, the people said.
Twitter’s stock rose more than 5% in premarket trading, to about $51.50 a share. An agreement is not yet final and may still fall apart, but what had initially seemed to be a highly improbable deal appeared to be nearing an endgame. The situation involving Twitter and Musk remains fluid and fast-moving, the people with knowledge of the situation said.
Musk, who has more than 83 million followers on Twitter and began amassing shares in the company earlier this year, declared his intent to buy the company on April 14 and take it private. But his proposal was quickly dismissed by Wall Street because it was unclear if he could come up with the money to do the deal. Twitter also adopted a “poison pill,” a defensive manoeuvre that would prevent Musk from accumulating more of the company’s stock.
Musk updated his proposal last week, putting pressure on Twitter to more seriously consider his bid. In a securities filing made public Thursday, Musk detailed how he had put together financing from the investment bank Morgan Stanley and a group of other lenders, which were offering $13 billion in debt financing, plus another $12.5 billion in loans against his stock in Tesla, the electric carmaker that he runs. He said he would use another $21 billion in cash to buy the rest of Twitter’s equity.
A Twitter spokesman declined to comment. In previous public statements, the company had said its board was “continuing to conduct a careful, comprehensive and deliberate review to determine the course of action in the best interest of the company and all Twitter stockholders.”
Musk did not respond to a request for comment. The Wall Street Journal earlier reported Twitter’s increased receptivity to Musk’s bid.
Wall Street was likely to view the openness of Twitter’s board to Musk’s bid as “the beginning of the end for Twitter as a public company with Musk likely now on a path to acquire the company unless a second bidder comes into the mix,” Dan Ives, an analyst at Wedbush Securities, wrote in a note Sunday.
Musk’s offer for Twitter is a 54% premium over the share price the day before he began investing in the company in late January. But Twitter’s shares traded higher than Musk’s bid for much of last year.
Several analysts have said they expected Twitter’s board to only accept a bid that valued it at a minimum of $60 a share. Twitter’s stock rose above $70 a share last year when the company announced goals to double its revenue, but has since fallen to around $48 as investors have questioned its ability to meet those targets.
Musk, 50, has made clear that he sees many deficiencies in Twitter as a social media service. He has said that he wants to “transform” the company as a “platform for free speech around the globe” and that it requires vast improvements in its product and policies.
Musk has tried to negotiate with Twitter using the service itself, threatening in several tweets that he might take his bid directly to the company’s shareholders in what is called a “tender offer.” A tender offer is a hostile manoeuvre in which an outside party circumvents a company’s board by asking shareholders to sell their shares directly to them.
He has also acted erratically on the platform, raising concerns over how he might manage the service should he be in charge of it. On Saturday, Musk took aim at billionaire Bill Gates, saying Gates had taken a “short” position on the stock of Tesla, which meant Gates was betting the carmaker’s shares would fall. On Sunday, Musk tweeted that he was “moving on” from making fun of Gates.
Even so, Musk maintains amicable ties with some high-ranking members of Twitter. Over the weekend, Musk traded friendly tweets with Jack Dorsey, the company’s co-founder and a board member. Dorsey stepped down as Twitter’s CEO in November and soon will be leaving its board.
Both men share similar views on cryptocurrencies and on promoting more free speech online. When Musk briefly flirted with joining Twitter’s board this month, Dorsey tweeted, “I’m really happy Elon is joining the Twitter board! He cares deeply about our world and Twitter’s role in it.”
On Friday, Block, a financial services company led by Dorsey, disclosed that he had changed his title at the firm from CEO to “Block Head.” That shift appeared to resonate with Musk.
“Your new title at Block is fire,” Musk tweeted at Dorsey on Saturday, using two flame emojis to signify his approval. Last year, Musk had changed his title at Tesla from CEO to technoking.
The New York Times Company
