Twitter nears a deal to sell itself to Elon Musk

NEW YORK: Twitter is nearing a deal to sell itself to Elon Musk, two people with knowledge of the situation said, a move that would unite the world’s richest man with the influential social networking service, The News York Times reported.

An agreement could be announced as soon as Monday.

Twitter’s board was negotiating with Musk into the early hours of Monday over his unsolicited bid to buy the company, after he began lining up $46.5 billion in financing for the offer last week, said the people, who spoke on the condition of anonymity. The two sides were discussing details including a timeline to close any potential deal and any fees that would be paid if an agreement were signed and then fell apart, they said.

The discussions followed a Twitter board meeting on Sunday morning to discuss Musk’s offer, the people said. Obtaining commitments for the financing was a turning point for how the board viewed Musk’s bid of $54.20 a share, enabling the company’s 11 board members to seriously consider his offer, the people said.

Twitter’s stock opened 4 percent higher on Monday, at about $51 a share.

An agreement is not yet final and may still fall apart, but what had initially seemed to be a highly improbable deal appeared to be nearing an endgame. The situation involving Twitter and Musk remains fluid and fast-moving, the people with knowledge of the situation said.

Musk, who has more than 83 million followers on Twitter and began amassing shares in the company earlier this year, declared his intent to buy the company on April 14 and take it private. But his proposal was quickly dismissed by Wall Street because it was unclear if he could come up with the money to do the deal. Twitter also adopted a “poison pill,” a defensive maneuver that would prevent Musk from accumulating more of the company’s stock.

Musk updated his proposal last week, putting pressure on Twitter to more seriously consider his bid. In a securities filing that was made public on Thursday, Musk detailed how he had put together financing from the investment bank Morgan Stanley and a group of other lenders, which were offering $13 billion in debt financing, plus another $12.5 billion in loans against his stock in Tesla, the electric carmaker that he runs. He said he would use another $21 billion in cash to buy the rest of Twitter’s equity.

A Twitter spokesman declined to comment. In previous public statements, the company had said its board was “continuing to conduct a careful, comprehensive and deliberate review to determine the course of action in the best interest of the company and all Twitter stockholders.”

Musk did not respond to a request for comment. The Wall Street Journal earlier reported Twitter’s increased receptivity to Musk’s bid.

Wall Street was likely to view the openness of Twitter’s board to Musk’s bid as “the beginning of the end for Twitter as a public company with Musk likely now on a path to acquire the company unless a second bidder comes into the mix,” Dan Ives, an analyst at Wedbush Securities, wrote in a note on Sunday.

Musk’s offer for Twitter is a 54 percent premium over the share price the day before he began investing in the company in late January. But Twitter’s shares traded higher than Musk’s bid for much of last year.

Several analysts have said they expected Twitter’s board to only accept a bid that valued it at a minimum of $60 a share. Twitter’s stock rose above $70 a share last year when the company announced goals to double its revenue, but has since fallen to around $48 as investors have questioned its ability to meet those targets.

Musk, 50, has made clear that he sees many deficiencies in Twitter as a social media service. He has said that he wants to “transform” the company as a “platform for free speech around the globe” and that it requires vast improvements in its product and policies.

Musk has tried to negotiate with Twitter using the service itself, threatening in several tweets that he might take his bid directly to the company’s shareholders in what is called a “tender offer.” A tender offer is a hostile maneuver in which an outside party circumvents a company’s board by asking shareholders to sell their shares directly to them.