After he wooed investors with details of his $43bn offer, the company negotiated with Tesla’s CEO, according to various reliable sources
After he wooed shareholders with financing details on his $43bn acquisition offer, Twitter began negotiations with Elon Musk on April 24, people familiar with the matter said.
Earlier on Sunday, the company made a decision to engage with Musk but that did not mean it would agree to his $54.20 a share bid, the sources added. However, it implied that Twitter was exploring whether a sale to Musk was possible on attractive terms.
Seeking support for his bid, the chief executive of Tesla, Musk has been meeting with Twitter shareholders in the last few days. For Twitter to grow and become a genuine platform of free speech, he has said it needs to be taken private.
After Musk outlined a detailed financing plan for his bid on Thursday and implored it not to let the opportunity for a deal slip away, Twitter was pushed to hold talks by its shareholders.
The board had decided to engage with Musk to gather more information and possibly get better terms despite Musk’s insistence that he was making his “best and final” bid was impeding negotiations, sources said.
One of the sources told Reuters that Twitter wanted to know more about any active investigations into Musk by regulators, including by the US Securities and Exchange Commission (SEC), which would present a risk to the deal.
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While he amassed a stake in Twitter earlier this year, securities lawyers say that Musk – who settled charges that he misled investors by implying four years ago he had secured funding to take Tesla private – may have breached SEC disclosure rules.
The source added that Twitter was investigating whether regulators in any of its major markets would take issue with Musk owning the company. According to sources, Twitter could ask for a sizeable breakup fee were it to establish that a sale to Musk would be risky.
After Musk made his offer, the social media company adopted a poison pill to prevent him from increasing his more than 9% stake in the company above 15% without negotiating a deal with the board. In response, Musk threatened to launch a tender offer that he could use to express shareholder support for his bid.
The sources said a concern that Twitter’s board discovered was that many shareholders could back Musk in a tender offer unless it sought to negotiate a deal with him. While the poison pill would prevent them from tendering their shares, the company was worried that if it was seen to be going against the will of many of its investors, its negotiating hand would weaken considerably.
Neither representatives for Musk nor Twitter immediately responded to requests for comment.
