Musk considering tender offer to get Twitter one way or another

21 Apr 2022

Elon Musk at Web Summit 2013. Image: Dan Taylor/Heisenberg Media via Flickr (CC by 2.0)

New documents show Musk is exploring a tender offer to acquire Twitter, with a big loan from Morgan Stanley and others to fund the deal.

Elon Musk is now considering issuing a tender offer to buy some or all Twitter shares in a bid to take control of the social media company and eventually make it private.

According to a new filing with the US Securities and Exchange Commission (SEC) published today (21 April), Musk is offering to issue a tender offer – a bid to purchase some or all stock of a publicly traded company at a premium – to take over Twitter. He also seems to have the funds ready for the purchase – all $46.5bn of it.

Some of the funds have arrived in Musk’s hands in the form of a $12.5bn loan from investment bank Morgan Stanley, according to documents under the title Project X, with around the same amount from certain other firms, including Bank of America, Barclays and BNP Paribas.

Since the start of April, a lot has ensued between Musk and Twitter. First, he became one of the company’s biggest stakeholders, with plans to have him installed in the board. These plans then fell though, after which Musk offered to buy the company and take it off the stock market.

With Twitter’s board not responding to his offer, Musk is now considering his options with the tender offer, although it is not yet confirmed whether he will go through with it.

Twitter, on the other hand, does not want to find itself in the hands of the Tesla and SpaceX founder. Last week, its board of directors announced that the company was adopting a limited duration shareholder rights plan – also known as a ‘poison pill’ – to prevent Musk from taking control.

“The Rights Plan is intended to enable all shareholders to realise the full value of their investment in Twitter,” the board wrote in a statement.

“[It] will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the board sufficient time to make informed judgments and take actions that are in the best interests of shareholders.”

Last week, a Twitter shareholder sued Musk for failing to promptly disclose that he had bought a significant stake in the company.

Musk had been acquiring shares since January and acquired 5pc by 14 March, meaning he needed to notify the SEC by 24 March. However, the lawsuit document states that Musk continued to amass shares before notifying the SEC.

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Elon Musk at Web Summit 2013. Image: Dan Taylor/Heisenberg Media via Flickr (CC by 2.0)

Vish Gain is a journalist with Silicon Republic