Elon Musk is reportedly in talks with potential investors about a bid for Twitter and, within days, a new plan with the partners could be announced.
One possibility is partnering with Silver Lake Partners, a private equity firm that was set to co-invest with Musk in 2018 when he was considering taking Tesla private, according to people familiar with the matter, reported New York Post.
Egon Durban, who is Silver Lake’s Co-CEO, is a member of the Twitter board and oversaw Musk’s negotiation team during the failed attempt to take Tesla private in 2018. Silver Lake did not respond to a request for comment.
It’s unclear if Elon Musk would make a completely new offer to Twitter, maybe boosting his current offer, or whether new partners would simply join him in the purchase.
Poison Pill
Meanwhile, on April 15, Twitter’s board of directors approved a defensive move in response to Musk’s aggressive acquisition bid for $43 billion — the microblogging platform adopted the ‘poison pill’.
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The ‘poison pill’, as it’s known in business, offers existing Twitter shareholders time to buy more shares at a lower price, diminishing Musk’s ownership interest. The move is intended to make it difficult for anyone, including the billionaire, to acquire a stake in the company worth more than 15%.
The ‘poison pill’ strategy was developed by the New York-based law firm Wachtell, Lipton, Rosen, and Katz in the 1980s. The name stems from the poison pills that spies used to avoid being interrogated by their enemy if they were caught.
It was created to prohibit an acquiring business from purchasing a majority stake in a potential target or directly negotiating with shareholders at a period when takeovers were becoming increasingly widespread.
It is worth noting that there are two types of ‘poison pill’ strategies — the flip-in and flip-over. Among both options, the flip-in variety is more commonly followed.
However, Twitter hasn’t submitted its shareholder rights plan with the Securities and Exchange Commission yet, despite announcing the ‘poison pill’ in a statement.
The SEC filing will provide more information on whether it prohibits like-minded investors from pooling their money to buy a stake worth more than 15%.
Taking The Charge
Earlier this month, Musk revealed that he has a 9.2% stake in Twitter. He then announced his appointment to the company’s board of directors and began making changes to the platform, including converting the offices into a homeless refuge.
Musk has stated numerous times that he believes Twitter fails to adhere to “free speech principles”, and has even recommended the creation of a competing network where free speech and sticking to free speech are given high priority.
The Tesla CEO eventually dropped out of the board of directors and offered to buy the company for $54.20 per share, though he didn’t say how he meant to pay for it.
Meanwhile, Prince Alwaleed bin Talal, a Saudi Arabian businessman, stated this week that as one of Twitter’s key shareholders, he had rejected the planned acquisition deal. According to other reports, Thoma Bravo, a private equity group, said on Twitter that it is considering making a competing offer for the company.
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However, on April 15, in a statement, Twitter also said: “Board of Directors has unanimously adopted a limited duration shareholder rights plan… The Board adopted the Rights Plan following an unsolicited, non-binding proposal to acquire Twitter.”
“The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders,” the company added.
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