The offer has been rejected by Saudi Prince Alwaleed bin Talal, a major shareholder in Twitter, while the board of directors has adopted a limited duration shareholder rights plan to reduce Musk’s chances of gaining control in the firm through open market accumulation
Elon Musk has offered to acquire 100% of Twitter at $54.2 per share in cash. (Credit: Dan Taylor/Heisenberg Media/Wikimedia Commons)
American billionaire Elon Musk has made a non-binding proposal to buy microblogging platform Twitter for $43bn as per a filing made with the US Securities and Exchange Commission (SEC).
Earlier this month, the Tesla and SpaceX founder had acquired a 9.2% stake in the social media company.
Musk purchased 73.4 million shares through the Elon Musk Revocable Trust to become the largest shareholder in Twitter. However, he refused to become a part of Twitter’s board of directors.
The billionaire has now offered to buy out the remaining stake that he doesn’t own for a price of $54.2 per share in cash.
Musk wrote to Twitter’s chairman Bret Taylor that he invested in Twitter believing in its potential to be the platform for free speech around the world. The former said that he opines that free speech is a societal imperative for a functioning democracy.
Musk stated: “However, since making my investment I now realise the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.
“As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced.”
Musk added that his proposal is the best and final offer from his side and if it is not accepted, then he will have to reconsider his position in the social media company as a shareholder.
Reacting to the offer, Saudi Prince Alwaleed bin Talal, a major shareholder in Twitter, said that he rejected Musk’s proposal. The Saudi Prince, who has a 5.2% stake through his Kingdom Holding Company, said that the proposed offer doesn’t come close to the intrinsic value of Twitter, considering its growth prospects.
Meanwhile, Twitter’s board of directors has adopted a limited duration shareholder rights plan unanimously in its response to Musk’s proposal.
The rights plan will bring down the chances of any entity, person, or group getting control of Twitter via open market accumulation without paying appropriate control premium to all shareholders. With an expiry date of 14 April 2023, the plan is also said to protect the company’s board by allowing enough time to make informed decisions and take steps that are in the best interests of shareholders.
The rights plan does not stop the board from engaging with parties or accepting an acquisition offer if it believes it to be in the best interests of the firm and its shareholders.
Reuters, citing undisclosed sources, reported that Thoma Bravo has shown interest in coming up with an acquisition offer for Twitter that would rival Elon Musk’s bid.