EXCLUSIVE Twitter under pressure from shareholders to seek deal with Musk, sources say

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Elon Musk’s Twitter account is seen on a smartphone in this photo illustration taken April 15, 2022. REUTERS/Dado Ruvic/Illustration

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April 24 (Reuters) – Twitter Inc (TWTR.N) is coming under increasing pressure from its shareholders to negotiate with Elon Musk, even as the world’s richest person has qualified his $43 billion bid for the platform. -form of its best and latest social media offering, people familiar with the matter said on Sunday.

While opinions among Twitter shareholders vary on what a fair price for a deal would be, many reached out to the company after Musk laid out his acquisition financing plan on Thursday and urged it not to pass up the deal. opportunity for a deal, the sources said. , speaking on condition of anonymity. Read more

Twitter’s board is expected to find Musk’s $54.20 per share cash offer for the company too low by the time it reports quarterly results on Thursday. Still, some shareholders who agree with the stance still want Twitter to seek a better offer from Musk, whose net worth is pegged by Forbes at $270 billion, the sources told Reuters.

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One option available to Twitter’s board is to open its books to Musk to try to entice him to sweeten its offer. Another would be to solicit bids from other potential bidders. While it’s not yet clear which path Twitter will take, it’s increasingly likely that its board will try to solicit a better offer from Musk even if he rejects the current one, the sources said.

“I wouldn’t be surprised to wake up next week and see Musk raise what he called his best and final offer to maybe $64.20 a share,” one of the fund managers invested said. on Twitter on condition of anonymity to discuss private conversations. with the company.

“He could also drop everything. Anything is possible,” the fund manager said of Musk’s offer.

Twitter shares closed at $48.93 on Friday, a steep discount from Musk’s bid that reflects uncertainty over the fate of his bid.

Twitter adopted a poison pill after Musk made his bid to stop him from increasing his more than 9% stake in the company above 15% without negotiating a deal with his board. In response, Musk threatened to launch a takeover bid which he could use to register Twitter shareholder support for his bid.

One concern Twitter’s board is weighing is that unless it seeks to broker a deal with Musk, many shareholders could back him in a takeover bid, the sources said. While the poison pill would prevent Twitter shareholders from tendering their shares, the company fears its negotiating hand could weaken significantly if it turns out to go against the wishes of many of its shareholders. investors, the sources added.

Musk, the chief executive of electric car maker Tesla Inc (TSLA.O), has met with Twitter shareholders since unveiling its offer on April 14, seeking to drum up support for its offer. Musk said Twitter needed to be private to grow into a true platform for free speech. Read more

Representatives for Twitter and Musk did not immediately respond to requests for comment.

The Wall Street Journal reported earlier Sunday on some of Musk’s meetings with Twitter shareholders. The newspaper also reported that Musk and Twitter would hold a meeting on Sunday to discuss the acquisition offer.

Pricing expectations among Twitter shareholders for the deal diverge largely based on their investment strategy, the sources said. Long-term active shareholders, who along with index funds own the bulk of Twitter shares, have higher price expectations, some in the $60 per share, the sources said. They are also more inclined to give Parag Agrawal, who became Twitter’s chief executive in November, more time to increase the company’s stock value, the sources added.

“I don’t believe Elon Musk’s offer ($54.20 per share) comes close to Twitter’s intrinsic value given its growth prospects,” Saudi Prince Alwaleed bin Talal tweeted on April 14. shareholder of Twitter.

Short-term investors such as hedge funds want Twitter to accept Musk’s offer or ask for only a small raise, the sources said. Some of them worry that a recent plunge in the value of tech stocks amid worries about inflation and an economic slowdown makes Twitter unlikely to pick up more value any time soon. the sources added.

“I would say, take the $54.20 a share and get it over with,” said Sahm Adrangi, portfolio manager at Kerrisdale Capital Management, a hedge fund that owns 1.13 million shares in Twitter, or 0.15 % of the company, and has been an investor since early 2020.

A silver lining from Twitter’s board is that Musk’s bid doesn’t appear to have converted his army of Twitter followers into new shareholders in the San Francisco-based company who might back his bid, the sources said. Twitter’s retail investor base has grown from around 20% before Musk unveiled his stake on April 4 to around 22%, the sources said.

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Reporting by Svea Herbst-Bayliss in Boston and Greg Roumeliotis in New York; Editing by Will Dunham

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