Twitter, Inc. may be more amenable to Elon Musk now that he has secured finance for a $43 billion tender offer, and negotiations may begin as early as Sunday, the Wall Street Journal reported earlier this week.
Musk’s enormous tender offer, worth $46.5 billion, was put together just days ago following the Twitter board’s decision to use a “poison pill” to thwart his initial attempt to acquire the firm.
“Twitter is reevaluating the offer and is more likely than ever to seek to negotiate,” the Wall Street Journal said on Sunday. “The situation is fluid, and it is far from certain that Twitter will comply.”
The corporation must complete its valuation and may not respond until Thursday, when the first quarter profits are out, but conversations on how to proceed may occur between now and then.
“The two parties are scheduled to meet Sunday to discuss Mr. Musk’s proposal,” the Journal adds, citing the same unidentified sources familiar with the subject.
Earlier on Sunday, The Wall Street Journal reported on several of Musk’s meetings with Twitter shareholders. Additionally, the publication stated that Musk and Twitter would meet on Sunday to discuss the takeover proposal.
The sources indicated that Twitter shareholders’ price estimates for the sale vary significantly dependent on their investing approach. Active long-term shareholders, who combined with index funds own the majority of Twitter stock, predict higher prices, some in the $60s per share, according to the sources. They are also more willing to give Parag Agrawal, who took over as CEO of Twitter in November, further time to improve the company’s stock value, the sources noted.
“I feel that Elon Musk’s proposed offer ($54.20 per share) falls short of Twitter’s fundamental value considering its development possibilities,” Saudi Arabia’s Prince Alwaleed bin Talal, a Twitter shareholder, tweeted on April 14.
According to the sources, short-term investors such as hedge funds want Twitter to accept Musk’s offer or request only a minor increase. Some of these executives are concerned that a recent decline in the value of technology equities amid fears about inflation and an economic slowdown makes it doubtful that Twitter will ever be able to generate greater value for itself, the sources noted.
“I would say take the $54.20 per share and walk away,” said Sahm Adrangi, portfolio manager at Kerrisdale Capital Management, a hedge fund that owns 1.13 million shares of Twitter, or 0.15 percent of the firm, and has been an investor since early 2020.
One bright spot for Twitter’s board of directors is that Musk’s offer did not appear to convert his army of Twitter followers into new owners in the San Francisco-based firm willing to support his proposal, sources said. According to the sources, Twitter’s retail investment base has expanded from approximately 20% before to Musk’s April 4 announcement to approximately 22%.
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