Twitter’s stock price rose 4% amid a report that Elon Musk may reach a deal with Twitter as soon as Monday.
Talks between the world’s richest man and the social media giant’s leadership are in the “final stretch,” Bloomberg reported, citing a person with knowledge of the matter. Reuters reported that Twitter’s board of directors is poised to recommend shareholders accept Musk’s original offer of $54.20 per share.
Twitter’s stock price reached nearly $51 during the first hours of trading on Monday — an increase from roughly $49 around market close on Friday.
The development comes after a Sunday meeting between Musk and Twitter executives to demonstrate that he had financing in place. The Tesla mogul had earlier hinted he might bypass the board with a tender offer directly to shareholders if the board rejected the bid he first announced on April 14.
In a Securities and Exchange Commission filing from April 20, Musk revealed that he had obtained a debt commitment letter from Morgan Stanley Senior Funding, Inc. and other financial institutions showing they were committed to provide $13 billion in financing. A separate debt commitment letter from Morgan Stanley Senior Funding, Inc. and certain other financial institutions committing to provide $12.5 billion in margin loans, and an equity commitment letter in which Musk committed to provide equity financing for his offer.
Twitter is also facing increased pressure from shareholders to accept the deal with Musk.
“A concern that Twitter’s board is weighing is that unless it seeks to negotiate a deal with Musk, many shareholders could back him in a tender offer,” Reuters reported. “While the poison pill would prevent Twitter shareholders from tendering their shares, the company is worried that its negotiating hand would weaken considerably if it was shown to be going against the will of many of its investors.”
Elon Musk became Twitter’s largest shareholder in early April following his purchase of a 9.2% stake in the social media firm. However, the billionaire is now in second place, as asset management firm Vanguard owns approximately 10%. He has promised to “make significant improvements to Twitter” and has polled his followers on whether or not Twitter “rigorously adheres” to the principles of free speech.
In the wake of his purchase — after which he was offered a position on Twitter’s board of directors — many employees are wary of reforms that Musk may bring to the site. Twitter told Reuters that the company’s board “plays an important advisory and feedback role across the entirety of our service” while daily decisions are made by Twitter’s management and employees.
One employee found this distinction “hard to believe” and told Reuters, “If that’s the case, why would Elon want a board seat?”
Reuters added that other employees fear Musk will alter Twitter’s “corporate culture” of “inclusivity,” as Musk “has faced widespread criticism for posting memes that mocked transgender people and efforts to stem the spread of COVID-19.”
Musk, however, is no friend to corporate wokeness. He recently pinned a drop in Netflix’s share prices on the “woke mind virus,” which makes the streaming service “unwatchable.”