Twitter is expected to decline Elon Musk’s bid to purchase the company in the coming days, unnamed sources told the Wall Street Journal.
Twitter expects to announce its rejection of the Tesla and SpaceX CEO’s offer on April 28, when it reports its earnings, sources told the Journal. According to the report, Twitter may accept an offer from private-equity firm Thoma Bravo LP, backed up by Apollo Global Management.
Musk was reported to be in talks with Apollo, which owns Yahoo, and another private-equity firm, Silver Lake, to finance a deal for the company, possibly at a higher price per share than his current offer. Such an offer could overvalue the company, between “$60 and $65 per share,” Wells Fargo analyst Brian Fitzgerald told Seeking Alpha.
At the close of trading on Monday, Twitter’s share price was $48.45, gaining 7.5 percent on the news that Twitter is unlikely to take Musk’s offer.
Last Thursday, Musk filed an offer with the Securities and Exchange Commission to purchase 100 percent of Twitter’s stock at $54.20 per share. The offer was tantamount to a hostile takeover, with Musk claiming that he would “reconsider my position as a shareholder” if the offer was rejected – a threat to sell his existing stock, thereby tanking Twitter’s value. Musk is currently Twitter’s largest shareholder and owns 9 percent of the company.
Musk had claimed that his decision was motivated by free-speech concerns, stating, “I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Twitter’s board had received Musk’s decision unfavorably and activated a “poison pill” plan to prevent the acquisition. The provision they activated stipulates that once an individual or entity acquires 15% of stock or more, Twitter will offer other shareholders more stock at a discount – thereby reducing Musk’s voting power.
Separately, Saudi investor Prince Al-Waleed bin Talal, another significant shareholder in Twitter, who owns 5.2 percent of its stock, stated he would vote to reject Musk’s bid.
At a conference in Vancouver on Friday, Musk claimed that he had a “Plan B” in the event of a poison pill activation. So far, he has not announced it.