Elon Musk’s Twitter account can be seen on a smartphone in front of the Twitter logo in this photo taken on April 15, 2022. REUTERS / Dado Ruvic / Illustration
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April 15 (Reuters) – Twitter Inc (TWTR.N) on Friday adopted the “poison pill” – a standard ingestion protection that limits Elon Musk’s ability to increase his stake in the social media platform after a buyout company emerges. to challenge his $ 43 billion bid for the company.
Thoma Bravo, a technology-focused private investment company that managed more than $ 103 billion in assets at the end of December, told Twitter that it was exploring the possibility of collecting an offer, people familiar with the matter said. Read more
It is unclear how much he will be willing to offer Toma Bravo and there is no certainty that such a competitive offer will be realized, sources warned, asking not to be identified, as the matter is confidential.
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A spokesman for Toma Bravo declined to comment, while representatives of Twitter did not immediately respond to a request for comment. The New York Post reported Thursday that Toma Bravo is considering a Twitter offer.
The move raises the specter of more private investment companies vying for Twitter. According to data provider Preqin, the global private investment industry is worth about $ 1.8 trillion in dry powder. Unlike large technology conglomerates, most buyout companies will not face antitrust restrictions when acquiring Twitter.
It remains possible for a private investment company to bolster Musk’s offer by partnering with him instead of challenging him. However, Musk’s criticism that Twitter relies on advertising for most of its revenue has led some private investment companies to fear cooperating with it, industry sources said. This is because strong cash flow makes leveraged buying finance much easier.
Twitter has more than $ 6 billion in cash on its balance sheet, and its annual cash flow is nearly $ 700 million, which provides some comfort to banks that are considering whether to provide debt for a deal. However, leveraged buyouts for Twitter may be the largest of all time, potentially requiring several buyout companies and other large institutional investors to come together.
Musk is the richest man in the world with a net worth set by Forbes at 265 billion dollars. However, he has drawn a line on how much he is willing to pay. He informed Twitter on Wednesday that his $ 54.20 cash offer for the company was his “best and last offer” and that he would reconsider his position as a shareholder on Twitter if it was rejected. Musk owns more than 9% of Twitter, making him the largest shareholder after mutual fund giant Vanguard.
Musk tweeted Thursday that Twitter shareholders should have a say in his offer and posted a poll on Twitter in which most users agreed. The Twitter board is still evaluating Musk’s offer and will only put it to the vote of the company’s shareholders if it approves it. Shares of Twitter fell on Thursday, indicating that most investors expect the company’s board to reject Musk’s offer as inadequate and weak in terms of funding details. Read more
Twitter announced on Friday that it has taken a poison pill that will dilute anyone who accumulates more than 15% in the company by selling more shares to other shareholders. Officially known as the shareholders’ rights plan, the poison pill will be in effect for 364 days.
This move will not prevent Musk from making his offer directly to shareholders on Twitter by launching a tender offer. While the poison pill will prevent most Twitter shareholders from selling their shares, the tender will allow them to register their support or disapproval of Musk’s offer.
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Report by Greg Rumeliotis and Crystal Hu in New York Additional reports by Arunima Kumar and Kannaki Deka in Bengaluru; edited by Jonathan Oatis, Franklin Paul and Nick Zieminski
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