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Twitter is re-examining Elon Musk’s offer, he may be more accommodating to the agreement

Twitter Inc. TWTR 3.93% is re-examining Elon Musk’s $ 43 billion takeover bid after the billionaire offered to fund the bid, indicating that a social networking company could be more accommodating to the deal.

Twitter was expected to turn down an offer made by Mr Musk earlier this month without saying how he would pay for it. But after revealing last week that it now has $ 46.5 billion in funding, Twitter is looking at the offer again and is more likely than before to try to negotiate, people familiar with the matter said. The situation is changing rapidly and Twitter is still not guaranteed to do so.

Twitter is still working on a very important estimate of its own value, which would have to come close to Mr Musk’s offer, and could also insist that sweeteners like Mr Musk agree to cover protection against disintegration should the agreement disintegrate. , some people said.

The two sides will meet on Sunday to discuss Mr Musek’s proposal, people said.

Twitter is expected to consider the offer when it announces revenue for the first quarter on Thursday, if not earlier, people said. Twitter’s response is not necessarily black and white and could leave the door open for inviting other candidates or negotiating with Mr. Musek on terms other than price. Mr Musk has reiterated to Twitter President Brett Taylor in recent days that he will not back down from his offer of $ 54.20 a share, people said.

The potential turnaround on Twitter came after Mr Musk met privately with several of the company’s shareholders on Friday to praise the merits of his proposal, while reiterating that, according to people familiar with the board, he must make a “yes or no” decision. matter. He also promised to solve freedom of speech problems, which he said were troubling the platform and the country on a larger scale, whether his offer succeeded or not, they said.

CEO of Tesla Inc. TSLA -0.37% decided to select shareholders in a series of video calls focusing on actively managed funds, people said hoping they could influence the company’s decisions.

Mr Musk said he saw no way Twitter’s management could get the shares to its offer price per se, given the problems in the business and the persistent inability to fix them. It could not be determined whether he described in detail the specific steps he would take, although he tweeted that he wanted to reduce the platform’s dependence on advertising and also make simpler changes, such as allowing longer tweets.

Mr. Musk already has several shareholders who have gathered after the negotiations. Lauri Brunner, who manages the large growth fund Thrivent Asset Management LLC, sees Mr. Musek as an experienced operator. “Tesla has an established history,” she said. “It’s a catalyst for delivering strong operational performance on Twitter.” Minneapolis-based Thrivent has a $ 0.4 million stake in Twitter and is also a shareholder in Tesla.

Mr Musk has already said he is considering handing over his offer directly to shareholders by launching a tender. Even if he were to receive significant shareholder support in the tender offer – which is far from guaranteed – he would still need a way to circumvent the company’s poison pill, a legal maneuver used by the company that effectively prevents him from increasing his stake to 15% or more. .

Elon Musk has already said he is considering handing over his offer directly to shareholders by launching a tender.

Photo: Miguel Roberts / The Brownsville Herald / Associated Press

One oft-used bidding tactics that seek to gain control of the target area is now out of reach. Twitter’s directors have spread the terms, meaning that a dissident shareholder would need several years to gain control, rather than a single shareholder vote. Last year, Twitter tried to phase out the split terms of the board of directors because they were condemned by the corporate governance community, but not enough shareholders voted in favor of the measure. The company is trying to do so again at this year’s annual meeting, which is scheduled for May 25. There are only two directors to be re-elected, and it is too late for Mr Musk to nominate his own.

Shares of Twitter have been trading below its offer price since its offer on April 14, which is usually a sign that shareholders are skeptical that an agreement will be reached, even though it closed about 4% on Friday at $ 48.93, the day after revealed the financing of the transaction. . He said that if the current offer fails, he could sell his stake of more than 9%.

The funding involved more than $ 25 billion in debt from almost every global blue-chip investment bank except two advisors on Twitter. The rest was $ 21 billion in equity that Mr. Musk would raise himself, presumably through the sale of existing stakes in his other businesses, such as Tesla. The speed with which funding has combined and the sell-offs in recent days – making the cash offer relatively more attractive – have probably contributed to Twitter’s greater willingness to comply with Mr Musek’s proposal.

When Elon Musk tries to buy Twitter, WSJ looks back at former Twitter suitors such as Salesforce, Disney and Alphabet. Technical reporter Tim Higgins explains why these past talks failed and what is different this time. Illustration: Nikki Walker

Twitter’s board should negotiate with Mr. Musk because his shares have “gone nowhere” since the company went public eight years ago, said Jeff Gramm, portfolio manager at Bandera Partners LLC, a New York hedge fund with approximately 385 million in management. The company last bought Twitter shares in February and owns about 950,000, representing about 11% of its portfolio.

Mr Gramm said Twitter’s board of directors could not leave Mr Musek’s offer without providing an alternative that gave shareholders real value. “I’m not sure what this may be like at this stage other than finding a higher bid,” he said.

—Sarah E. Needleman contributed to this article.

Write to Cara Lombardo at cara.lombardo@wsj.com

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