Buying Twitter was always going to be difficult, even for the world’s richest person – a highly complicated financial transaction made considerably more difficult by a protective “poison pill” manoeuvre by the platform’s board.
Musk’s $43 billion offer sets out the several potential stumbling blocks: prospective government permissions, legal and regulatory due diligence, final agreement discussions, and, of course, how to pay for it all.
Then, on Friday, Twitter’s board made it clear that it will not go quietly, warning that any acquisition of more than 15% of the company’s stock without its approval would activate a plan to flood the market with shares, making a takeover much more difficult.
“Your move, @elonmusk,” Silicon Valley journalist Kara Swisher tweeted.
The offer itself, which Musk stated was final, values Twitter at $54.20 per share, which is higher than the closing price prior to his bid but lower than the peak of $77.06 set in February of last year.
Even with a modest and uncompromising proposal, which might aid the board’s argument for rejection, it’s a tense situation that could result in litigation from nearly everyone involved.
According to Wharton School finance expert Kevin Kaiser, in order to successfully reject Musk’s bid, the Twitter board will need to be on firm basis in arguing that the business is worth more.
Shareholders who believe the board is rejecting a profitable deal will be allowed to sue Twitter.
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