Twitter began talks with Elon Musk on Sunday after he attracted shareholders with details of the financing of his $ 43 billion takeover bid, insiders said.
The company’s decision to engage with Musk earlier Sunday did not mean it would accept his $ 54.20 share offer, sources said. However, this meant that Twitter was investigating whether the sale of Musk was possible under attractive conditions.
Musk, Tesla’s chief executive, has been meeting with Twitter shareholders over the past few days to seek support for his offer. He said Twitter must be private to grow and become a real platform for free speech.
Shareholders forced Twitter to hold talks after Musk outlined a detailed funding plan for his offer on Thursday and urged him not to allow the deal to slip away.
Musk’s insistence on making his “best and final offer” was an obstacle to the talks, sources said, but the board has decided to engage with Musk to gather more information and potentially get better terms.
Twitter wanted to know more about any active investigations by regulators against Musk, including the US Securities and Exchange Commission (SEC), that could pose a risk to the deal, a source told Reuters.
Securities attorneys say Musk – who settled allegations of misleading investors by claiming four years ago that he provided funding to make Tesla private – may have violated SEC disclosure rules because he amassed share on Twitter earlier this year.
Twitter is also investigating whether regulators in one of its main markets would object to Musk’s ownership of the company, the source added. If Twitter finds that selling Musk would be risky, it could demand a significant separation fee, according to sources.
The social media company took a poison pill after Musk made his offer to prevent him from increasing his stake of more than 9% in the company by more than 15% without negotiating a deal with the board. In response, Musk threatened to launch a tender that he could use to register shareholder support for his offer.
The Twitter board’s concern was that unless it sought to negotiate a deal with Musk, many shareholders could support it in a tender offer, sources said. Although the poison pill would prevent them from trading their shares, the company worried that its negotiating hand would weaken significantly if it proved to be against the will of many of its investors.
Representatives of Twitter and Musk did not immediately respond to requests for comment.
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