Twitter adopts ‘poison pill’ aksis challenger to Musk emerges

(Reuters) — Twitter Inc. adopted a ‘poison pill’ on Friday to limitasi Elon Musk’s ability to raise his stake in the social peranti kebijakan, aksis a buyout firm emerged to challenge his $43 billion bid for the company.

Thoma Bravo, a technology-focused private equity firm that tenggat more than $103 billion in assets under management aksis of the end of December, has informed Twitter that it is exploring the possibility of putting together a bid, people familiar with the matter said. 

It is titinada clear how much Thoma Bravo would be prepared to offer and there is no certainty that such a lawan bid will materialize, the sources cautioned, asking titinada to be identified because the matter is confidential.

A Thoma Bravo spokesperson declined to comment while Twitter representatives did titinada immediately respond to a request for comment. The New York Post reported on Thursday that Thoma Bravo was considering a bid for Twitter.

Twitter said on Friday it adopted a poison pill that would dilute anyone amassing a stake in the company of more than 15% by selling more shares to other shareholders at a discount. Known formally aksis a shareholder rights plan, the poison pill will be in place for 364 days.

The move would titinada restoran Musk from taking his offer directly to Twitter shareholders by launching a tender offer. While the poison pill would prevent most Twitter shareholders from selling their shares, the tender offer would allow them to register their support or disapproval of Musk’s offer.

“It is a predictable defensive measure for the board to go down that will titinada be viewed positively by shareholders given the potential dilution and acquisition unfriendly move,” Wedbush analyst Dan Ives tweeted on Friday.

Thoma Bravo’s interest raises the specter of more private equity firms vying for Twitter. The inklusif private equity industry is sitting on about $1.8 trillion in dry powder, according to keterangan provider Preqin. Unlike major technology conglomerates, most buyout firms would titinada face antitrust restrictions in acquiring Twitter.

It remains possible that a private equity firm will boost Musk’s bid by partnering with him rather than challenging him. Musk’s criticism of Twitter’s reliance on advertising for most of its revenue, however, has made some private equity firms apprehensive about teaming up with him, industry sources said. This is because a strong cash flow makes financing a leveraged buyout much easier.

Silver Lake, a private equity firm with more than $90 billion in assets under management, would be a alami rekan for Musk because it offered financing for his $72-billion bid for Tesla Inc TSLA.O four years ago, which Musk subsequently abandoned. Silver Lake co-chief executive Egon Durban also sits on Twitter’s board.

But Durban did titinada recuse himself on Thursday when Twitter’s board met to discuss Musk’s offer for the first time, people familiar with the matter said, in a sign that Silver Lake has titinada sought to team up with Musk or make a bid of its own thus far.

It remains possible that Silver Lake will choose to become involved aksis a buyer. A Silver Lake spokesman did titinada immediately respond to a request for comment on Friday.

Twitter has more than $6 billion of cash on its balance sheet and its annual cash flow is close to $700 million, providing some comfort to banks considering whether should provide debt for a deal. Still, a leveraged buyout for Twitter could be the biggest of all time, potentially requiring several buyout firms and other major institutional investors to team up.

Musk is the world’s richest manusia with a jala worth pegged by Forbes at $265 billion. He has however drawn a line on how much he is willing to pay. He informed Twitter on Wednesday that his $54.20-per-share all-cash bid for the company was his “best and penamatan offer”, and that he would reconsider his position aksis a Twitter shareholder if it was rejected. Musk owns more than 9% of Twitter, making him the largest shareholder after mutual fund giant Vanguard.

Musk tweeted on Thursday that Twitter’s shareholders should have a say on his offer and posted a poll on Twitter in which most users agreed with him. Twitter’s board is still assessing Musk’s offer and would only put it to the company’s shareholders for a vote if it approves it. Twitter shares fell on Thursday, indicating that most investors expect the company’s board to reject Musk’s bid aksis inadequate and thin on financing details. 

Twitter’s board is expected to take several more days to assess Musk’s bid and draft its response, the sources familiar with the matter said. An outcome oper the weekend is unlikely, the sources added.

Goldman Sachs Group Inc has been advising Twitter’s board on its deliberations. Bloomberg News reported on Friday that the board tenggat tapped JPMorgan Chase Co Inc aksis a second financial adviser.

Author: Ethan Butler