Twitter has adopted a “poison pill”, a usual defensive tactic in the face of takeovers, that limits Elon Musk’s ability to increase his stake in the social media platform, just as a takeover firm has emerged to rival his $43 billion bid for Twitter.
Informed sources said Thoma Bravo, the technology-focused private equity firm with assets under management of more than $103 billion, has told Twitter it is exploring the possibility of making an offer.
However, the sources, who asked not to be identified, because the matter is confidential, stated that it is not clear the size of the offer that Thomas Bravo can make, and it is not certain whether such a competing offer will come to light.
A spokesperson for Thoma Bravo declined to comment while Twitter representatives did not immediately respond to a request for comment. The New York Post reported that Thomas Bravo is considering an offer to buy Twitter.
The move raises the specter of more private equity firms competing on Twitter. According to data provider Precken, the private equity sector holds regarding $1.8 trillion in liquidity. Unlike the big tech groups, most private equity firms will not face antitrust restrictions when acquiring Twitter.
It is still possible for a private equity firm to boost Musk’s offer by partnering with him rather than competing with him. Industry sources said that Musk’s criticism of Twitter’s reliance on ads for most of its revenue made some private equity firms wary of cooperating with him.
Twitter has more than $6 billion in cash on its balance sheet and annual cash flow approaching $700 million, providing some relief for banks considering loans to back the deal. However, Twitter’s leveraged acquisition may be the largest ever, which may require the cooperation of several acquisitions and other large institutional investors.
Musk is the world’s richest man, with Forbes magazine estimating his net worth at $265 billion. However, he set a limit on the amount he was willing to pay. He told Twitter on Wednesday that his all-cash offer of $54.20 per share was the “best and last offer” and that he would reconsider his position as a Twitter contributor if rejected.
Musk owns more than 9 percent of Twitter, making him the largest shareholder following mutual fund giant Vanguard.
On Thursday, Musk said on Twitter that Twitter contributors should have a say in his offer, and published a poll in which most users agreed with him. Twitter’s board is still evaluating Musk’s proposal and will not put it to the company’s shareholders for a vote unless it approves it.
In a document he sent to the US Stock Exchange Control Authority, Musk made it clear that this offer was “the best and final”, threatening that in the event of rejection, he would “reconsider his position as a contributor” to the social network.
In a letter addressed to Twitter CEO Brett Taylor, Musk confirmed that he invested in the platform because of its pivotal role in “free expression around the world,” which, in his opinion, constitutes “a social positive for effective democracies.”
“But since I made my investment, I realized that the company is not thriving and is not fulfilling its social duty in its current form,” he added, suggesting that Twitter should be withdrawn from the New York Stock Exchange.
The company’s shares have fallen, indicating that most investors expect the board of directors to dismiss Musk’s offer as insufficient.
On Friday, Twitter said it had adopted a “poison pill” plan that would reduce the stake of anyone raising more than 15 percent by selling more shares to other shareholders. Officially known as a shareholder’s equity plan, it will remain in effect for 364 days. (Archyde.com)
