Twitter Inc. is in the final stretch of negotiations about a $43 billion sale to Elon Musk that could rank as one of the biggest-ever leveraged buyouts of a listed company, people with knowledge of the matter said.
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 jumped 3.8% to $50.78 on Monday, still below Musk’s offer price, indicating lingering skepticism over the prospects of an acquisition succeeding, although analysts say it is becoming more likely.
Twitter started warming up to a potential deal after Musk revealed a financing plan that included backing from Morgan Stanley and other institutions. Musk, on Friday, made a pitch to select shareholders in a number of video calls, with a focus on actively managed funds, according to the Wall Street Journal.
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.
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 skepticism 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.
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 U.S. Securities and Exchange Commission, has cast a shadow over his Twitter bid.
Musk is one of Twitter’s most prominent and outspoken users. He is known for sometimes cryptic or mysterious tweets, lobbed at all hours of the day, on everything from cryptocurrencies to space travel to whether Twitter should have an edit button. While Musk has tweeted about plans to authenticate Twitter users and stop paying its board a salary, he’s not publicly outlined much about how he’d manage the company.
He has said his main motivation in buying Twitter is to ensure the principles of free speech, which he says is “essential to a functioning democracy.”
Twitter is scheduled to report earnings on Thursday, “which likely will not be rainbows and smiles thus putting further pressure on the company around this game of high stakes poker with the Musk bid looming,” said Dan Ives, an analyst at Wedbush Securities, in a note to investors on Sunday.
