Elon Musk and Twitter are reportedly nearing a deal that would allow the world's richest man to take over the social media company.
The two sides were engaged in detailed negotiations through the weekend discussing details of a possible takeover, including a timeline and possible breakup fees should a deal fall apart, according to the New York Times, the Wall Street Journal and other media outlets.
The reports said a formal agreement could come this week, possibly as early as Monday. Twitter shares rose four per cent to $50.49 US a share on Monday, but below what Musk had called his "best and final" offer of $54.20. That would value the social networking giant at $43 billion US.
Two Canadian banks — the Royal Bank of Canada and CIBC — are among a consortium of a dozen lenders who agreed to help Musk finance a bid of up to $46.5 billion US. Royal Bank agreed to lend Musk $750 million US, and CIBC $400 million US, according to a regulatory filing.
Twitter and Musk did not respond to requests for comment, but Musk once again drew attention to his interest in the company based on preserving free speech principles in a tweet on Monday.
I hope that even my worst critics remain on Twitter, because that is what free speech means
—@elonmuskIt's the latest development in a fast-moving saga over the past few weeks, one that saw Musk quietly buy enough shares in Twitter to become its biggest single shareholder, before declaring his interest in the company was "passive" and denying he had any interest in controlling it.
After being invited to join the board, Musk then rejected that offer and turned more aggressive, launching a formal takeover bid. Twitter's board rejected that by implementing a "poison pill" designed to thwart any unwanted advances.
That move was largely designed to buy Twitter some time to come up with a better alternative to Musk's offer, but the board's sudden receptiveness is a sign that the company hasn't managed to come up with another plan, Wedbush Securities analyst Dan Ives said.
"While the board approved the poison pill, which essentially gave them time to find a 'white knight' and second bidder, likely they are now empty handed," he said on Sunday.
Musk has said he wants to buy Twitter because he doesn't feel it's living up to its potential as a platform for free speech.
In recent weeks, he has voiced a number of proposed changes for the company, from relaxing its content restrictions — such as the rules that suspended former U.S. president Donald Trump's account — to ridding the platform of its problems with fake and automated accounts.
Musk says Twitter needs to be taken private so that it will not be bound by the constraints that public companies face and can focus on making changes to ensure free speech, adding an edit button and cracking down on spam.
Going private
The latest developments signal the beginning of a new chapter for Twitter, with the likeliest scenario being that Musk takes it over, Ives said.
"[Wall] Street will read this news today as the beginning of the end for Twitter as a public company, with Musk likely now on a path to acquire the company unless a second bidder comes into the mix," he said.
Some of the company's investors are eager to avoid a drawn-out affair.
"I would say, take the $54.20 a share and be done with it," Sahm Adrangi, portfolio manager at Kerrisdale Capital Management, a hedge fund that owns more than one million shares in the company, told Reuters.
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2022-04-25 17:58:11Z
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