Twitter begins negotiations with Tesla CEO as Board members met on Sunday morning to discuss Elon Musk's unsolicited USD 46.5 billion bid to buy the company. Two people with knowledge of the situation spoke about this on the condition of anonymity. It is believed that the company's 11 Board members are seriously considering Elon Musk's offer.
Reports also suggested that Twitter's Board planned to meet with Musk's side later on Sunday to discuss other contours around a potential deal. Those details include a timeline to close any potential deal and any fees that would be paid if an agreement was signed and then fell apart.
Elon Musk's insistence that his bid for Twitter is his 'best and final' has emerged as a hurdle in the deal negotiations, the sources said. Nevertheless, Twitter's Board has decided to engage with Musk to gather more information on his ability to complete the deal, and potentially get better terms, the sources added.
Read | Tesla CEO Elon Musk likely to buy Twitter soon after securing $46.5 billion for bid
Twitter is also looking into whether regulators in any of the major markets it operates would object to Elon Musk owning the company, the source added. Were Twitter to establish that a sale to Elon Musk would be risky, it could ask for a sizeable break-up fee, according to the sources.
After Elon Musk made his offer, the social media company adopted a poison pill to prevent him from raising his 9.2% stake in the company above 15% without negotiating a deal with its Board. In response, Musk has threatened to launch a tender offer that he could use to register Twitter shareholder support for his bid.
The 'tender offer' is an offer to buy shares directly from shareholders at a particular price. But then that would need broad shareholder backing to pull off such a maneuver. Musk would also need the Board to eliminate Twitter's 'poison pill' plan, which makes it difficult for him to buy more than 15% of the company's shares.
The plan will remain in effect until April 14, 2023. The rule was introduced by Twitter a day after Elon Musk announced his bid. A concern that Twitter's Board weighed was that unless it sought to negotiate a deal with Musk, many shareholders could back him in a tender offer, the sources said.
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, the sources added.
(With Reuters Inputs)
