Twitter shares closed at $48.93 on Friday, a significant discount to Mr Musk’s bid reflecting uncertainty about the fate of his bid
Twitter shares closed at $48.93 on Friday, a significant discount to Mr Musk’s bid reflecting uncertainty about the fate of his bid
Twitter Inc. is facing increasing pressure from its shareholders to negotiate with Elon Musk, even though the world’s richest person has described his $43 billion bid for the social media platform as his best and final offer, Mit said people familiar with the matter on Sunday.
While Twitter shareholders’ views vary on what a fair price for a deal would be, many turned to the company after Mr Musk outlined his acquisition financing plan on Thursday and urged it not to pass up the opportunity for a deal said sources, who spoke on condition of anonymity.
Twitter’s board of directors is expected to determine that Mr. Musk’s cash offer of $54.20 per share is too low for the company when it reports quarterly earnings on Thursday. Still, some shareholders who agree with this stance want Twitter to get a better offer from Mr Musk, whose net worth is estimated by Forbes at $270 billion, the sources told Reuters.
One option available to Twitter’s board of directors is to open his books to Mr. Musk to try to persuade him to sweeten his offer. Another would be to solicit bids from other potential bidders. While it’s not yet clear which path Twitter will take, it’s becoming increasingly likely that its board will seek a better offer from Mr Musk, even if it declines the current one, the sources said.
“I wouldn’t be surprised to wake up next week and see Mr. Musk raise what he called his best and last offer to potentially $64.20 per share,” said one of the fund managers who invests in Twitter is, on condition of anonymity, for discussion private discussions with the company.
“He might as well just drop the whole thing. Anything is possible,” the fund manager said of Mr Musk’s offer.
Twitter shares closed at $48.93 on Friday, a significant discount to Mr Musk’s bid reflecting uncertainty about the fate of his bid.
Twitter took a poison pill after Mr. Musk made his bid to prevent him from increasing his stake in the company from more than 9% to over 15% without negotiating a deal with the board. In response, Mr. Musk has threatened to launch a takeover bid that would allow him to register Twitter shareholder support for his bid.
One concern Twitter’s board is weighing is that many shareholders could back him with a takeover bid if he doesn’t try to negotiate a deal with Mr. Musk, the sources said. While the poison pill would prevent Twitter shareholders from offering their shares, the company fears its negotiating position would be significantly weakened if it were found to be acting against the wishes of many of its investors, the sources added.
Mr Musk, the chief executive officer of electric car maker Tesla Inc., has been meeting with Twitter shareholders since unveiling his bid on April 14 to seek support for his bid. Mr Musk has said that in order to grow and become a true free speech platform, Twitter needs to be privatized.
Representatives from Twitter and Mr. Musk did not immediately respond to requests for comment.
The Wall Street Journal earlier Sunday reported on some of Mr Musk’s meetings with Twitter shareholders. The newspaper also reported that Mr. Musk and Twitter would hold a meeting on Sunday to discuss the takeover bid.
intrinsic value
Twitter shareholders’ price expectations for the deal diverge largely based on their investment strategy, the sources said. Active long-term shareholders, who along with index funds own most of Twitter’s stock, have higher price expectations, some as high as $60 per share, the sources said. They are also more inclined to give Parag Agrawal, who became Twitter’s chief executive in November, more time to increase the value of the company’s shares, the sources added.
“I don’t think Elon Musk’s proposed offer ($54.20 per share) comes close to Twitter’s intrinsic value given its growth prospects,” Prince Alwaleed bin Talal of Saudi Arabia, a Twitter shareholder, tweeted on April 14th.
Short-term investors like hedge funds want Twitter to accept Musk’s offer or just ask for a small raise, the sources said. Some of them worry that a recent plunge in the value of tech stocks amid inflation worries and an economic slowdown makes it unlikely that Twitter can deliver more value to itself any time soon, the sources added.
“I’d say take the $54.20 a share and you’re done,” said Sahm Adrangi, a portfolio manager at Kerrisdale Capital Management, a hedge fund that owns and was 1.13 million shares of Twitter, or 0.15% of the company Investor since early 2020.
One bright spot for the Twitter executive is that Mr Musk’s bid did not appear to convert his army of Twitter followers into new shareholders in the San Francisco-based company who could support his bid, the sources said. Twitter’s retail investor base grew from about 20% to about 22% before Musk announced his stake on April 4, according to the sources.
