Elon Musk has provided to purchase Twitter at a valuation of about $43 billion. Here’s what will — or might — occur subsequent:
The board evaluations the provide. The board will work with its advisers at Goldman Sachs to evaluate Mr. Musk’s provide. They should contemplate, amongst different issues, whether or not the deal pretty values the corporate, and whether or not Mr. Musk has the financing to cobble collectively a deal.
The board can’t merely determine it doesn’t like Mr. Musk as a suitor, however they will “provide you with the reason why they don’t just like the bid,” like, for instance, his capability to fund it, mentioned Steven Davidoff Solomon, a professor on the College of Legislation on the College of California, Berkeley.
The board declares its resolution. The board will seemingly take up to a couple days to evaluate the provide. If it rejects the provide, it could go in considered one of a number of methods: It could put in a protection mechanism often known as a poison tablet that limits the power of Mr. Musk, and each different shareholder, to purchase up Twitter shares within the open market.
As soon as it does that, it might nonetheless determine to promote itself, however with out the strain of Mr. Musk — or every other suitor — threatening to accumulate it by shopping for a major quantity shares within the open market.
There are causes Twitter could decide to not do a poison tablet. It is likely to be cautious of potential criticism {that a} poison tablet is deflecting the issues of a extremely vocal member of its group.
Likewise, Mr. Musk, whose final reported stake in Twitter was a little bit over 9 p.c, has incentive to maintain his proportion of Twitter shares under 10 p.c. As soon as he hits that threshold, he’s restricted in how rapidly he can promote out of the corporate.
Assuming Twitter rejects the provide and opts to not put in a poison tablet, Mr. Musk might elevate his provide — regardless of having already mentioned it was greatest and last. He might additionally take the bid on to different shareholders, by way of what is called a young provide, through which he would purchase shares from different shareholders.
Nonetheless, at the very least one shareholder has already said the bid undervalues the corporate.
The board probably appears for a white knight. “Twitter has primarily been on the market since they went public,” mentioned Howard Berkenblit, who leads the Capital Markets group at regulation agency Sullivan & Worcester.
Mr. Musk’s newest exercise probably heightened curiosity in and Twitter’s amenability to a deal. Some personal fairness companies could also be postpone by Twitter’s restricted money movement, however quite a few know-how firms could have a look, given heightened curiosity within the social media big’s energy and attain.
There might be large suitors. Recall that Microsoft, which owns LinkedIn, and Oracle each vied for a take care of video sharing firm TikTok. Nonetheless, potential antitrust issues would seemingly be a major deterrent, given the Biden administration’s scrutiny of huge know-how offers.
