Exclusive-Twitter under shareholder pressure to seek deal with Musk, sources say

div classBodysc17zpet90 cdBBJodivpBy Svea HerbstBayliss and Greg Roumeliotisp

pReuters – Twitter Inc is coming under increasing pressure from its shareholders to negotiate with Elon Musk even though the worlds richest person has called his 43 billion bid for the social media platform his best and final offer, people familiar with the matter said on Sunday.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pWhile the views of Twitter shareholders vary over what a fair price for a deal would be, many reached out to the company after Musk outlined his acquisition financing plan on Thursday and urged it not to let the opportunity for a deal slip away, the sources said, speaking on condition of anonymity.p

pTwitter‘s board is expected to find that Musk’s allcash 54.20 per share offer for the company is too low by the time it reports quarterly earnings on Thursday. Nonetheless, some shareholders who agree with that stance still want Twitter to seek a better offer from Musk, whose net worth is pegged by Forbes at 270 billion, the sources told Reuters. p

pOne option available to Twitters board is to open its books to Musk to try to coax him to sweeten his bid. Another would be to solicit offers from other potential bidders. While it is not yet clear which path Twitter will take, it is increasingly likely that its board will attempt to solicit a better offer from Musk even as it rebuffs the current one, the sources said.p

p“I wouldnt be surprised to wake up next week and see Musk raise what he called his best and final offer to possibly 64.20 per share,” one of the fund managers who is invested in Twitter said on condition of anonymity to discuss private conversations with the company. p

p“He could also drop the whole thing entirely. Anything is possible,” the fund manager said about Musks offer.p

pTwitter shares closed at 48.93 on Friday, a significant discount to Musk‘s offer that reflects the uncertainty over his bid’s fate.p

pTwitter adopted a poison pill after Musk made his offer to prevent him from raising his more than 9 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. p

pA concern that Twitters board is weighing is that unless it seeks to negotiate a deal with Musk, many shareholders could back him in a tender offer, the sources said. 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, the sources added. p

pMusk, the chief executive of electric car maker Tesla Inc, has been meeting with Twitter shareholders since he unveiled his offer on April 14, seeking support for his bid. Musk has said Twitter needs to be taken private to grow and become a genuine platform for free speech.p

pRepresentatives for Twitter and Musk did not immediately respond to requests for comment.

pThe Wall Street Journal reported earlier on Sunday on some of Musks meetings with Twitter shareholders.

p‘INTRINSIC VALUE’

pThe price expectations among Twitter shareholders for the deal diverge largely based on their investment strategy, the sources said. Active longterm shareholders, who together with index funds hold the biggest chunk of Twitter shares, have higher price expectations, some in the 60spershare, the sources said. They are also more inclined to give Parag Agrawal, who became Twitter‘s chief executive in November, more time to boost the value of the company’s stock, the sources added.

“I don‘t believe that the proposed offer by Elon Musk 54.20 per share comes close to the intrinsic value of Twitter given its growth prospects,” Saudi Arabia’s Prince Alwaleed bin Talal, a Twitter shareholder, tweeted on April 14.p

Short termminded investors such as hedge funds want Twitter to accept Musks offer or ask for only a small increase, the sources said. Some of these are fretting that a recent plunge in the value of technology stocks amid concerns over inflation and an economic slowdown makes it unlikely Twitter will be able to deliver more value for itself anytime soon, the sources added.p

“I would say, take the 54.20 a share and be done with it,” said Sahm Adrangi, portfolio manager at Kerrisdale Capital Management, a hedge fund that owns 1.13 million shares in Twitter, or 0.15 of the company, and has been an investor since early 2020.

One silver lining for Twitter‘s board is that Musk’s offer did not appear to convert his army of Twitter followers into new shareholders in the San Franciscobased company who could back his bid, the sources said. Twitters retail investor base has increased from about 20 before Musk unveiled his stake on April 4 to some 22, according to the sources.p

pp Reporting by Svea HerbstBayliss in Boston and Greg Roumeliotis in New York Editing by Will Dunham

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