According to sources familiar with the situation, Twitter Inc (TWTR.N) began talks with Elon Musk on Sunday after he wooed several of the social media company’s shareholders with financial specifics on his $43 billion purchase bid.
According to the sources, the company’s decision to speak with Musk earlier on Sunday does not imply that it will accept his $54.20 per share offer. It does, however, imply that Twitter is currently looking at the possibility of selling the firm to Musk on favorable terms, according to the sources.
Musk, the CEO of electric carmaker Tesla Inc (TSLA.O), has been meeting with Twitter shareholders in recent days to seek support for his takeover attempt. He believes that in order for Twitter to thrive and become a genuine venue for free speech, it needs to be taken private.
Following Musk’s Thursday presentation of a comprehensive funding plan for his proposal, many Twitter shareholders contacted the firm, urging it not to let the possibility for a merger pass them by, according to Reuters.
According to the sources, Musk’s insistence that his bid for Twitter is his “best and final” has become a stumbling block in the transaction negotiations. Nonetheless, according to the sources, Twitter’s board of directors has opted to interact with Musk in order to learn more about his ability to close the purchase and possibly negotiate better terms.
According to the sources, Twitter has not yet determined if it will pursue a sale in order to put pressure on Musk to increase his offer. Because the deal conversations are private, those with knowledge of the situation declined to be identified.
According to one of the individuals, Twitter wants to learn more about any ongoing investigations into Musk by regulators, including the Securities and Exchange Commission (SEC), that could jeopardize the deal’s completion.
Musk, who settled claims that he misled investors by claiming four years ago that he had secured funds to take Tesla private, may have violated SEC disclosure regulations when he acquired a stake in Twitter early this year, according to securities lawyers.
According to the insider, Twitter is also looking into whether regulators in any of its key markets would object to Musk owning the company. According to the sources, if Twitter determines that selling to Musk is dangerous, it may demand a large break-up fee.
Following Musk’s approach, the social media business implemented a poison pill to prevent him from boosting his more than 9% ownership in the company above 15% without first striking an agreement with the board. Musk has responded by threatening to launch a tender offer in order to gain Twitter shareholder backing for his purchase.
According to the sources, Twitter’s board was concerned that unless it sought to negotiate a deal with Musk, many shareholders would support him in a tender bid.
While the poison pill would prohibit Twitter shareholders from tendering their shares, the firm is concerned that if it was revealed to be going against the wishes of many of its investors, it would significantly undermine its negotiating position, according to the sources.
