(Update: 20: 00ET): In an attempt to move along their hostile takeover following Twitter’s adoption of a poison capsule takeover defense (see below), the NY Post reports that Elon Musk is usually speaking to potential co-investors exactly who could partner with him on the bid for the social network, and cites sources according to who a new plan that includes companions could be announced within days.
One possibility is teaming with private-equity firm Silver Lake Partners, which was planning to co-invest with him in 2018 when he was taking into consideration taking Tesla private, plus whose Co-CEO Egon Durban is already a Twitter panel member and led Musk’s deal team during the 2018 failed effort to take Tesla private, sources said. Magic Lake declined to comment.
Whether Musk would present Twitter having an entirely new offer — perhaps raising his current bid — or whether or not new partners would simply go in on a purchase with him isn’t clear. A Musk spokesperson declined in order to comment.
Even as we predicted earlier (see below), one way to circumvent Twitter’s Toxic Pill is for Musk “ to be joined by a number of like-minded, anti-censorship investors like Peter Thiel who either build up stakes through the toxic pill 15% limit along the way making a management and plank replacement by proxy vote the simple outcome. ” And indeed, the Post writes since the “ pill might not stop other entities or people from acquiring their own shares of up to 15% of the company. Those owners could partner with Musk to pressure a sale, make modifications in our executive ranks or push for other overhauls from the company. ”
“ This is simply not over, ” a source close to the situation told the Blog post.
It sure isn’t because separately, Bloomberg , Reuters and the Post all report that will besides Musk’s offer, Twitter has been fielding takeover interest from other events, including technology-focused private equity firm Thoma Bravo, which is considering making a rival offer. The New York Blog post reported Thoma Bravo’s attention on Thursday.
Additionally , Bloomberg Intelligence expert Mandeep Singh writes that “ Musk can decide to partner with Oracle, whose co-founder Larry Ellison rests on Tesla’s board and has expressed interest in acquiring social networking company TikTok’s U. S. assets, and a private equity consortium that includes Thoma Bravo to thwart Twitter’s poison tablet, while raising the bid 10-15% to about fifty dollars billion. ”
* * 2.
As had been widely expected and reported in the aftermath of Elon Musk heading hostile on Friday early morning, on Saturday morning Twitter adopted a measure which will shield it from aggressive acquisition bids in a desperate step to prevent billionaire Elon Musk’s offer to take the organization private and make it a bastion of free speech.
The board set up a shareholder rights plan, also known as a “ poison pill” which as we clarified recently for the benefit of the company’s excessively dramatic, overly literal plus overly snowflake employees, is not literal …
… plus which is exercisable in case a party – read Elon Musk – acquires 15% of the stock without before approval , lasting for one year (if the tablet had expired the day following the midterms it may have been a tad too obvious). The plan seeks to ensure that anyone taking control of Tweets through open market build up pays all shareholders a suitable control premium, according to a statement Friday.
For a company that has fought greatly with value creation – on Friday TWTR stock closed at $45. 08, or 18 cents higher than exactly where it closed on its first day as a public company, or $44. 90 – a toxic pill defense strategy allows existing shareholders the right to buy additional shares at a discount, effectively diluting the possession interest of the hostile celebration. Poison pills are common amongst companies under fire from activist investors or within hostile takeover situations.
Under Twitter’s strategy, each right will allow its holder to purchase, on the then-current exercise price, additional shares of common share having a then-current market value of twice the exercise associated with the right.
Tweets enacted the plan to buy time, Bloomberg reported citing a person familiar with the matter, although it wasn’t clear time for what: at $54. 20, Musk’s offer represents a premium to the historical TWTR price since IPO on 92% of the time.
And since the Twitter board , whose constituents are shown below…
… is about to get bombarded with a barrage of lawsuits claiming it violated its fiduciary duty, the board also stated it wants to be able to analyze and negotiate any deal, and may still accept this (spoiler alert: it won’t).
Twitter’s panel met Thursday to review Musk’s proposal – which based on the world’s richest man has been his “ best plus final” offer and whom had already accrued the stake of more than 9% within Twitter since earlier this year – to determine if it was in the very best interest of the company and all of its shareholders.
Included in Musk’s securities submitting disclosing the bid Thursday morning was a script associated with text he sent to the organization. In it he said, “ it’s a high price and your shareholders will love it. ” Hilariously, one prominent – and former – buyer said the offer has been too low and the market reaction appeared to agree. Saudi Arabia’s Prince Alwaleed bin Talal said the deal doesn’t “ come close to the inbuilt value” from the popular social media platform. Which is, well, hilarious given that as we showed yesterday , it appears the particular Prince no longer has immediate ownership of even one particular share of Twitter stock.
Speaking later Thursday night at a TED conference, Musk said he wasn’t certain he “ will really be able to acquire it. ” This individual added that his intent was to also preserve “ as many shareholders as allowed by the law, ” rather than keeping sole possession of the company himself.
After initially surging, Twitter shares dropped 1 . 7% in New York on Thursday, reflecting the market’s view that the deal will probably be rejected or to fall by means of.
Musk initial disclosed his Twitter risk on April 4, making him the largest individual investor. At the TED conference, he or she indicated that he has a Strategy B if Twitter’s board rejects his offer. He declined to elaborate. However in his filing earlier within the day, he said he would rethink his investment when the bid failed.
“ If the deal turn up useful info, given that I don’t have self-confidence in management nor will i believe I can drive the required change in the public market, I would need to reconsider my position as a shareholder, ” said Musk.
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Previewing the toxic pilll defense, on Thurs, Cameron Winklevoss, founder of the Gemini cryptocurrency exchange, messaged (of course) that “ Twitter is considering the poison pill to circumvent @elonmusk’s offer. ” In response, Musk said that a “ poison pill” move might be a “ breach” of the board’s fiduciary duty and could uncover Twitter’s board to “ titanic” legal liability.
Winklevoss alleged in his tweet that, by adopting the particular poison pill tactic, Tweets was demonstrating its commitment to preserving the status quo even if it has a negative impact on existing shareholders.
“ They would rather self-immolate than give up their censorship programs. This shows you how seriously committed they are to Orwellian control of the narratives plus global discourse. Scary, ” he published. Twitter has repeatedly suppressed and “ shadowbanned” conservative viewpoints, allegations the company provides repeatedly denied.
Adam Candeub, a regulation professor at Michigan Condition University, said that Twitter’s board could face legal consequences if they turn down an offer that’s financially lucrative to investors.
“ Twitter’s owned by shareholders, as well as the directors have to act in ways that’s in their best interests, not in the way that allows them to manage all of the corporation, ” Candeub told The Epoch Periods.
“ When they turn down a very favorable cost, there will be dereliction of their legal duty, and there could be lots of legal consequences. ”
* * 2.
Now that their original plan has been thwarted, Musk has said that he has a “ Plan B” in stock for the company even though he did not disclose what. As Mark Cuban mentioned yesterday…
… one possible response is perfect for Elon to be joined by one or more like-minded, anti-censorship traders such as Peter Thiel who also either build up stakes through the poison pill 15% restrict in the process making a management plus board replacement by proxy vote the simple outcome, or they just raise the takeover price to a level that will even the woke Twitter board can not reject.
Or skip the whale investor approach entirely, and open up twitter to a bulk investor buyout, in the form of a DAO, where “ token holders will get to election on what’s trending plus who gets verified. ”
Alternatively, Musk may take his appeal directly to his 82 million twitter followers (a quarter of Twitter’s complete 217 million global Everyday Active Users) and have them all buy several shares, then pledge them for Elon during the next proxy vote. Because as much as Twitter wants to reject any buyout offer that will prevent it through imposing the censorship its liberal board and workers love so much, there is only so much it can do.
In the end, however , the only question is how dedicated is Musk to control Twitter, because if he really wants this, he will get it.