A Saudi prince who’s a major shareholder in Twitter has rejected Elon Musk’s offer to buy the firm while hinting that he wants more money.
Alwaleed bin Talal made the announcement on Twitter itself Thursday morning, writing: ‘I don’t believe that the proposed offer by @elonmusk ($54.20) comes close to the intrinsic value of @Twitter given its growth prospects. Being one of the largest & long-term shareholders of Twitter, @Kingdom_KHC & I reject this offer.’
KHC is the Saudi-based holding company bin Talal operates. He also shared a grab of a tweet from 2015, in which he announced KHC had upped its stake in Twitter to 5.7 per cent. Musk owns around 9.2 per cent, and made his sensational bid for the company early Friday.
Twitter’s board of directors will be meeting soon to discuss Elon Musk‘s $41.39 billion hostile takeover bid, with the company saying it will ‘carefully review the proposal’.
The Twitter board will meet on Thursday at 1pm ET to consider Musk’s bid to take the company private, and the company will hold an all-hands meeting to update staffers at 5pm, according to CNBC. Meanwhile, Musk is set to give a live interview with TED at 1pm.
Shares of Twitter slumped in midday trading, dropping below Wednesday’s closing price to $45.76 — well below Musk’s offer price, signaling that investors remain skeptical that his takeover bid will succeed.
According to a regulatory filing, Musk launched his bid with a text message to Twitter board chair Bret Taylor on Wednesday, telling him he was preparing to send an offer letter and asking: ‘Are you available to chat?’
In the follow-up call, Musk told Taylor that his bid was his final offer, saying ‘I am not playing the back-and-forth game,’ according to notes for the call.
‘If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder,’ Musk warned Taylor, the notes show.
Twitter said in a statement: ‘The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.’
Musk’s offer price of $54.20 per share represents a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before the Tesla CEO publicly revealed his 9.2 percent stake in the company, sending the stock popping.
The offer figure also includes the digits ‘420,’ a reference to marijuana that Musk frequently jokes about.
Billionaire Elon Musk has offered to buy Twitter for $41.39 billion, a regulatory filing showed on Thursday
The Twitter board will meet on Thursday at 1pm ET to consider Musk’s bid to take the company private, and the company will hold an all-hands meeting to update staffers at 5pm. A conference room in Twitter headquarters is seen above
In a tweet, the SpaceX CEO simply wrote: ‘I made an offer’
Shares of Twitter slumped in midday trading, dropping below Wednesday’s closing price to $45.76 — well below Musk’s offer price, signaling that investors remain skeptical that his takeover bid will succeed
Twitter will review the offer with advice from Goldman Sachs and Wilson Sonsini Goodrich & Rosati, a source told Reuters.
Musk said U.S. investment bank Morgan Stanley was acting as financial adviser for his offer. He did not specify how he would finance the transaction if it goes ahead.
Though Musk is the world’s richest man, much of his wealth is not liquid, consisting of his ownership stakes in Tesla and SpaceX.
Musk would have to sell off some 43 million Tesla shares to fully finance the deal himself, a move he is seen as unlikely to take, meaning that he will likely secure outside financing using his stock as collateral.
Tesla shares sank more than 3 percent in morning trading on Thursday after the bid was announced.
A filing shows that Musk’s offer is contingent upon ‘completion of anticipated financing’, implying that funding for the bid is not yet secured.
Musk has a contentious relationship with some major investment banks, including JPMorgan Chase, which is currently involved in suits and countersuits with Tesla over Musk’s tweets and disputed bond contracts.
The chances of Musk’s Twitter takeover bid succeeding seemed very much up in the air.
Because his offer letter hints strongly at a management shakeup, the bid is likely to be fiercely opposed by current Twitter execs, including CEO Parag Agrawal, who also holds a board seat.
If Twitter’s board members decide to battle Musk’s takeover, they could solicit competing offers from other potential buyers. They could also pursue a ‘poison pill’ plan, which would trigger punishing dilutions of company shares if Musk attempted to increase his stake in the open market.
In a tweet, billionaire Mark Cuban said that Twitter is desperately seeking a ‘white knight’ to make a competing offer or buy out Musk’s position to save the company from his takeover.
‘Every major tech company , Google, fb, et al is on the phone with their anti trust lawyers asking if they can buy Twitter and get it approved,’ he wrote.
But Cuban added in a follow-up tweet: ‘I think Twitter will do everything possible not to sell the company. They will try to get a friendly to come in and buy Elon’s shares and get him out’
But Wedbush analyst Dan Ives called Musk’s offer a ‘historic move’ that is likely to succeed, writing in a note ‘ultimately we believe this soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company.’
Ives wrote that it was ‘get out the popcorn time’ and predicted ‘many twists and turns in the weeks ahead as Twitter and Musk walk down this marriage path.’
Billionaire Mark Cuban said that Twitter is desperately seeking a ‘white knight’ to make a competing offer or buy out Musk’s position to save the company from his takeover
Musk, who is Twitter’s biggest shareholder, sent his offer letter on Wednesday night, telling the company’s board that ‘it’s a high price and your shareholders will love it’.
He is the world’s richest man, with a net worth of $282 billion and a fortune worth $100 billion more than Amazon founder Jeff Bezos. Musk announced his bid in a tweet on Thursday morning, saying simply: ‘I made an offer.’
Outspoken Musk, known for his social media antics, told Twitter board chair Bret Taylor: ‘I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.
‘However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.’
The letter continued: ‘I am offering to buy 100 percent of Twitter for $54.20 per share in cash, a 54 percent premium over the day before I began investing in Twitter and a 38 percent premium over the day before my investment was publicly announced.
‘My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.
‘Twitter has extraordinary potential. I will unlock it.’
Musk launched his bid with a text message to board chair Bret Taylor on Wednesday, followed by a phone call
Musk’s formal offer letter to buy Twitter in a hostile takeover is seen in full above
Musk, who has more than 81 million followers on Twitter, recently added a new picture of himself as a much younger man
Musk added that his offer was not a ‘threat’, but ‘it’s simply not a good investment without the changes that need to be made.’
He continued: ‘And those changes won’t happen without taking the company private.’
He called that price his best and final offer, although the billionaire provided no details on financing. The offer is non-binding and subject to financing and other conditions.
The total deal value was calculated based on 763.58million shares outstanding, according to Refinitiv data.
Earlier this week, Musk rejected an offer to join Twitter’s board after disclosing his stake in the company, a move which analysts said signaled his intention to take over the company as a board seat would have limited his stake to just under 15 percent.
Musk has amassed over 80 million followers since joining the site in 2009 and has used the platform to make several announcements, including teasing a go-private deal for Tesla that landed him in hot water with regulators.
Musk has been a vocal critic of of Twitter in recent weeks, mostly over his belief that it falls short on free speech principles.
The social media platform has angered followers of Donald Trump and other far-right political figures who’ve had their accounts suspended for violating its content standards on violence, hate or harmful misinformation. Musk also has a history of his own tweets causing legal problems.
Musk’s move comes after he tweeted on Saturday asking whether the social media network was ‘dying’ and to call out users such as singer Justin Bieber, who are highly followed but rarely post.
In other weekend tweets, Musk posted joke polls on whether to drop the ‘w’ from Twitter’s name and on converting its San Francisco headquarters to a homeless shelter ‘since no one shows up anyway.’
He also suggested removing ads, Twitter’s main source of revenue.
The second tweet about deleting ‘w’ saw Musk give two options without no as an answer, with 55.8 percent saying ‘yes’ and 44.2 percent ‘of course’ of 445,158 votes to-date
In the first post, Musk seemingly took aim at the company’s lax remote working policies, saying he came up with the plan ‘since no one shows up anyway.’ So far, 91.1 percent of 923,459 respondents voted in favor of the plan
It comes after analysts speculated that Musk‘s roller coaster journey as Twitter‘s largest shareholder could be part of a ploy to stage a hostile take-over of the company.
Musk revealed last week that he had become Twitter’s largest shareholder, with a 9.2 percent stake in the company, on March 14.
One day after he disclosed his stake, platform CEO Parag Agrawal announced the Tesla co-founder had been invited to the join the company’s board of directors, a seat he gladly accepted.
By accepting the board seat, Musk was limited in how much of the company’s shares he could own, with a 14.9 percent cap.
However, on Sunday Parag announced the SpaceX CEO formally declined his board seat.
Musk, 50, signed the new filing with the Securities and Exchange Commission (SEC) Monday indicating he had declined his board seat.
One day after he disclosed his stake, platform CEO Parag Agrawal (pictured) announced the Tesla co-founder had been invited to the join the company’s board of directors, a seat he gladly accepted
The document stated Musk could ‘express his views’ about Twitter’s policies and services to the board or on social media. He could also purchase additional shares or sell Twitter stock, if he saw fit.
Agrawal said the board would still ‘remain open’ to Musk’s input, while also warning: ‘There will be distractions ahead but our goals and priorities remain unchanged.’
‘The board and I had many discussions about Elon joining the board, and with Elon directly,’ wrote Agrawal. ‘We were excited to collaborate and clear about the risks.
‘We also believed that having Elon as a fiduciary of the company where he, like all board members, has to act in the best interests of the company and all our shareholders, was the best path forward. The board offered him a seat.’
Agrawal continued: ‘We announced on Tuesday that Elon would be appointed to the board contingent on a background check and formal acceptance.
However, on Sunday Parag announced the SpaceX CEO formally declined his board seat
On April 5, Elon Musk vowed to ‘make significant improvements’ to Twitter after revealing his large stake in the social media platform and intention to join the board of directors
‘Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board.’
Agrawal did not specify why Musk was not joining the company’s board.
But, he added: ‘I believe this is for the best.
‘We have and will always value input from our shareholders whether they are on our board or not.’
The 37-year-old said: ‘Elon is our biggest shareholder and we will remain open to his input.’
‘The decisions we make and how we execute is in our hands, no one else’s.
‘Let’s tune out the noise, and stay focused on the work and what we’re building.’
How Musk could win control of Twitter EVEN if board refuses his offer: Breakdown of a VERY hostile takeover bid by a genius who is used to getting what he wants
If Twitter were to reject Musk’s bid, which analysts argue it cannot afford to do, the billionaire may target stockholders by either seeking proxy votes or purchasing their shares.
Here, DailyMail.com looks at what could happen next – and how Musk could be helped, or hindered, in his bid to buy his favorite social media network…
What is a hostile takeover – and what are the details of Musk’s attempted hostile takeover?
Tesla chief Elon Musk has launched a hostile takeover bid for Twitter, offering to buy 100 percent of its stock and take it private, a stock exchange filing revealed.
A hostile takeover occurs when an acquiring company or individual attempts to assume control of the organization against the wishes of its current management, according to Investopedia.
An offer such as Musk’s – which was made out-of-the-blue, and without board approval – can be considered a hostile takeover.
The acquiring party can achieve a takeover by fighting to replace the company’s leadership or, as Musk did, by issuing an offer for the company and attempting to buy the necessary stock on the open market.
Musk has offered to buy the social media platform for about $41billion, saying the social media company he has often criticized needs to go private to see effective changes.
Elon Musk (pictured on April 7, 2022) has offered to buy Twitter for $41.39billion. Musk’s offer price of $54.20 per share represents a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before the Tesla CEO’s over 9 percent investment in the company was publicly announced
Elon Musk shared news of his bid on Twitter around 7.30am Thursday
His offer price of $54.20 per share, which was disclosed in a regulatory filing on Thursday, represents a 38 percent premium to Twitter’s April 1 close.
‘As a result, I am offering to buy 100 percent of Twitter for $54.20 per share in cash, a 54 percent premium over the day before I began investing in Twitter and a 38 percent premium over the day before my investment was publicly announced,’ the tech tycoon wrote.
The total deal value was calculated based on 763.58 million shares outstanding, according to Refinitiv data.
‘My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,’ he said. ‘Twitter has extraordinary potential. I will unlock it.’
Musk added that his offer was not a ‘threat’, but ‘it’s simply not a good investment without the changes that need to be made.’
‘And those changes won’t happen without taking the company private.’
A hostile takeover typically tales place when the acquiring entity believes the target company is undervalued.
It can also occur when activist shareholders, like Musk, seek to change the organization but are not supported by the target company’s current management or board of directors.
What happens now?
SpaceX boss Elon Musk has launched his bid to take over Twitter, however the company’s Board of Directors still has the right to reject his offer.
The billionaire entrepreneur issued a tender offer Thursday morning to buy all of Twitter’s stock at $54.20 per share, 18.2 percent above the current market price of $45.85 per share.
If the board were to reject Musk’s tender offer, he could then approach the shareholders, who may accept the offer.
Investopedia notes that shareholders often accept the tender offer when it is a ‘sufficient premium to market value or if they are unhappy with current management’.
Musk could also employ a proxy fight in which opposing groups of stockholders attempt to persuade other stockholders to let them use their shares’ proxy votes.
If the Tesla CEO were to acquire enough proxies he could then use them to vote to accept his offer.
However, Twitter does have measures in place that could defend the company from a potential hostile takeover.
Twitter bylaws limit shareholders’ ability to call special meetings or call the shots in investor meetings.
The company also has the right to issue preferred shares that would give certain shareholders more voting rights than ordinary shareholders.
It is unclear how many of those preferred shares were issued as Twitter did not immediately respond to DailyMail.com’s request for comment.
Preferred shares or stocks with differential voting rights make it more difficult to generate the votes needed for a hostile takeover, if leadership owns a large enough portion of the shares with more voting power.
If the board were to reject Musk’s tender offer, he could then approach the shareholders, who may accept the offer. Musk could also employ a proxy fight in which opposing groups of stockholders attempt to persuade other stockholders to let them use their shares’ proxy votes. Twitter’s San Francisco headquarters is pictured in July 2021
How much of Twitter does Musk own? What is a share currently worth – and how much is he offering per share?
Tech tycoon Elon Musk is the social media platform’s largest shareholder.
He revealed in regulatory Securities and Exchange Commission (SEC) filings over recent weeks that he’d been buying shares in almost daily batches starting January 31, resulting in a 9.2 percent stake in Twitter.
He currently holds 73,486,938 shares of the company, valued at more than $3.3billion, based on the stock’s current market value of $45.85 per share.
He has offered to buy Twitter for $41.39billion, a regulatory filing showed on Thursday.
Musk’s offer price of $54.20 per share represents a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before the Tesla CEO’s over 9 percent investment in the company was publicly announced.
Musk is offering to purchase Twitter for $54.20 per share. The company’s stock is currently valued at $45.85 per share
News of Musk’s potential takeover prompted shares of Twitter to jump nearly 12 percent before the market open Thursday, reaching a high of $53.99 per share
News of Musk’s potential takeover prompted shares of Twitter to jump nearly 12 percent before the market open Thursday, reaching a high of $53.99 per share before dropping back down to $45.85, which is more similar to share prices in recent weeks.
Twitter’s stock value did surge nearly 30 percent in early April after Musk disclosed his stake in the company.
One day letter, Twitter CEO Parag Agrawal announced the Tesla co-founder had been invited to the join the company’s board of directors, a seat he gladly accepted.
By accepting the board seat, Musk was limited in how much of the company’s shares he could own, with a 14.9 percent cap.
However, on Sunday Parag announced Musk had formally declined his board seat.
The entrepreneur signed the new filing with the SEC on Monday indicating he had declined his board seat. The document stated Musk could ‘express his views’ about Twitter’s policies and services to the board or on social media. He could also purchase additional shares or sell Twitter stock, if he saw fit.
Musk became Twitter’s majority shareholder after he acquired 73.5 million shares of the platform. An SEC form in early April (pictured) revealed that Musk began purchasing Twitter stock on January 31 and continued to buy shares during every trading session through April 1
Who are the other shareholders?
Elon Musk is Twitter’s largest shareholder, owning a 9.2 percent stake in the company.
Only Vanguard Group’s suite of mutual funds and ETFs controls more Twitter shares.
The Vanguard Group, Inc. owns an 8.39 percent stake in the company, holding nearly 67.2 million shares.
The company’s mutual funds – Vanguard Total Stock Market Index Fund, Vanguard 500 Index Fund and Vanguard Mid Cap Index Fund – hold a 2.8 percent, 2.21 percent and 1.09 percent stake respectively, CNN Business reported. In total, this is approximately 48.7 millions shares.
Twitter’s other top owners include Morgan Stanley Investment Management Inc. with an 8.08 percent stake, BlackRock Fund Advisors, holding 4.56 percent and SSgA Funds Management, Inc. with a 4.54 percent stake.
The company’s other top shareholders hold between a 1.5 percent and 2.51 percent stake in Twitter.
Elon Musk is Twitter’s largest shareholder, owning a 9.2 percent stake in the company
What happens if investors say no?
Wall Street analysts predict Twitter is likely to reject Elon Musk’s ‘generous offer’ to purchase the company for $41.39billion.
If the Board of Directors does reject his offer, the Tesla boss will have to decide whether or not he wants to continue to up the stakes in his attempted hostile takeover of the company.
‘The big question for the Twitter board now is whether to accept a very generous offer for a business that has been a serial under-performer and tends to treat its users with indifference,’ Michael Hewson, Chief Market Analyst at CMC Markets told Reuters. ‘Twitter has also come under increasing criticism for its arbitrary censoring of accounts that don’t adopt a particular political narrative, as well as the arbitrary nature of how it verifies users, and deals with fake accounts, over genuine users.’
He added: ‘From customer service to the monetization of its user base, Twitter has been a serial under-performer for some time. Maybe a shaking up of the status quo wouldn’t be a bad thing!
‘Whatever your feelings on Musk, he would certainly shake things up, with the only question as to whether he would make things worse or improve them.’
Wall Street analysts predict Twitter is likely to reject Elon Musk’s ‘generous offer’ to purchase the company for $41.39billion. They also argue Twitter cannot afford to reject Musk’s bid. The billionaire is pictured at a SpaceX post-launch news conference in January 2020
‘Given the likelihood that Twitter’s board will reject the offer, the question then becomes whether Musk would want to perform a hostile takeover of the company,’ echoed Jesse Cohen, Senior Analyst at Investing.com. ‘Elon Musk’s offer shows that he has very little confidence in current management and does not believe he can drive the necessary change while Twitter is still public, particularly its free speech policies. Now we know the reason behind Musk’s refusal to join the board.’
However, other analysts allege Twitter cannot afford to reject Musk’s bid, arguing the offer – which is 18 percent above where Twitter’s stock closed on Wednesday and roughly 38 percent above where shares were trading before Musk revealed his stake – is too good to pass up.
‘Management is in a tight spot here,’ told CNBC’s SquawkBox Thursday morning. ‘A rebuff would be a powerful mistake … for management.’
Wedbush’s Dan Ives noted that although Musk’s offer is less than Twitter’s 52-week high, it is unlikely the company will get a competing offer.
‘I see no other bidder for Twitter. He went so above and beyond here,’ Ives said.
Other analysts argue that if Musk’s deal were to fall through, it would raise Twitter’s profile as a ‘potential takeover candidate’ for another investor.
‘Elon is not the most predictable human,’ Rich Greenfield, of Lightshed Partners, said, voicing his skepticism. ‘Part of this is, is he even serious. Is this just a game? Is he having fun and making a point about free speech and trying to hold management’s feet to the fire, or does he actually want to own and control Twitter and run it?
‘It reminds shareholders that unlike most of the companies in tech, heck, most of the companies in media land, there’s no control shareholder. You can buy Twitter.’
What do Twitter’s staff make of the takeover bid?
Twitter’s usually vocal employees have remained quiet in wake of Musk’s attempt to buy the company.
However, Haraldur Thorleifsson, a team leader at Twitter, issued several tweets Thursday morning criticizing the billionaire.
‘Just go to therapy dude,’ Thorleifsson wrote, seemingly of Musk.
‘Thousands of amazing people work at Twitter. Their job is to build and maintain a product used by hundreds of millions globally. That is an incredibly hard job and we don’t always succeed. But I’m proud to work alongside them and today I tip my hat in respect.’
Musk, in his bid to takeover the company, argued Twitter is ‘simply not a good investment without the changes that need to be made,’ noting the alleged necessary changes ‘won’t happen without taking the company private’.
