The social media company is working to hammer out terms of a transaction and could reach an agreement as soon as Monday if negotiations go smoothly, according to the people, who asked not to be identified because the information is private. Musk is lining up partners for the acquisition and continues to speak to potential co-investors, one of the people said. The situation is fluid, and talks could drag on longer or fall apart.
Twitter’s board was negotiating with the billionaire Tesla Inc chief executive officer on Sunday over terms of his unsolicited bid to buy Twitter for $54.20 per share, and talks continued overnight into the early hours of Monday, the people said. Shares of Twitter gained 5.9% to $51.81 in New York at the time of going to press.
Twitter started warming up to a potential deal after Musk revealed a financing plan that included backing from Morgan Stanley and other institutions.
Musk’s planned offer values Twitter at about $43 billion based on the number of outstanding shares listed in its annual report. Representatives for Twitter declined to comment on status of the talks, and Musk didn’t immediately respond to requests for comment.
While many details are yet to be worked out and events are unfolding quickly, what had initially seemed to be a long-shot deal looked closer to becoming reality.
Began Amassing Shares in January
Musk, who has more than 83 million followers on Twitter, began amassing shares in the company in January, disclosing a 9% stake earlier this month. That position got him invited to join Twitter’s board, an offer he ultimately rejected, only to turn around on April 14 with an unsolicited bid to buy the company and take it private.
His proposal was met with scepticism on Wall Street because, while he said it was his “best and final” offer, it lacked any details on financing. Even though Musk is the world’s richest person, much of his fortune is tied up in Tesla stock.
Twitter adopted a poison pill as a measure to prevent Musk from buying up more than 15% of the company, while giving the board more time to consider his bid and plot its next move.
Late last week, Musk gave more details on his financing plans, saying in a securities filing that he had lined up Morgan Stanley and other lenders, which were offering $13 billion in debt financing plus another $12.5 billion in loans against his stock in Tesla, as well as pledging to contribute an additional $21 billion of his own money through equity financing. It’s unclear whether Musk, who heads Tesla and Space Exploration Technologies Corp., would consider selling part of his stake in one of his prized companies to acquire Twitter.
Prolific Tweeter
He currently has about $3 billion in cash or other somewhat liquid assets after spending $2.6 billion buying his Twitter stake, according to Bloomberg calculations. Several possible partners have reached out to Musk to be part of the equity financing, people familiar with the discussions have said.
In a whirlwind of news in just over two weeks, it’s been hard to tell whether Musk, 50, would follow through on his offer. Musk is a prolific tweeter – posting a mix of memes, questions and barbs – and has vowed to turn Twitter into a bastion for free speech. But a previous claim that he had secured funding to take Tesla private, an episode that drew a lawsuit from the US Securities and Exchange Commission, has cast a shadow over his Twitter bid.
