Twitter began negotiations with Elon Musk on Sunday after he wooed shareholders with financing details of his $43 billion takeover bid, people familiar with the matter said.
The company’s decision to work with Musk, made earlier Sunday, did not mean it would accept his offer of $54.20 per share, the sources said. It did mean, however, that Twitter was looking into selling to Musk on attractive terms.
Musk, CEO of Tesla, has been meeting with Twitter shareholders over the past few days to get support for his bid. He said Twitter needs to be privatized in order to grow and become a true free speech platform.
Shareholders urged Twitter for talks after Musk on Thursday outlined a detailed financing plan for his bid and urged not to miss the opportunity for a deal.
Musk’s insistence that he make his “best and final” offer has been a hurdle in the negotiations, the sources said, but the board has decided to work with Musk to gather more information and possibly get better terms.
Twitter wanted to know more about active regulatory investigations into Musk, including the Securities and Exchange Commission, which would pose a risk to the deal, one of the sources told Reuters.
Securities attorneys say Musk — who has settled allegations that he misled investors by claiming four years ago he secured funding to take Tesla private — may have violated SEC disclosure rules when he earlier this year year has amassed a stake in Twitter.
Twitter is also considering whether regulators in one of its main markets would object to Musk owning the company, the source added. Should Twitter determine that selling to Musk would be risky, it could charge a hefty exit fee, according to the sources.
The social media company took a poison pill after Musk made his bid to prevent him from increasing his stake in the company from more than 9% to over 15% without negotiating a deal with the board. In response, Musk threatened to launch a takeover bid that would allow him shareholder support for his bid.
One concern Twitter’s board weighed was that many shareholders could back him with a takeover bid if he didn’t try to negotiate a deal with Musk, the sources said. While the poison pill would prevent them from tendering their shares, the company feared that if it turned out to be acting against the wishes of many of its investors, its negotiating hand would be significantly weakened.
Representatives from Twitter and Musk did not immediately respond to requests for comment.