The Private Equity Firm Might Finance A Potential Takeover

According to sources familiar with the situation, private equity firm Apollo Global Management has discussed funding a prospective buyout of Twitter. Apollo does not want to be a member of a private equity consortium that buys the social media business but would provide funding in the form of preferred shares.

  • Last week, Elon Musk, the CEO of Tesla and SpaceX and the world's richest man, made a bid to buy Twitter for $43 billion
  • According to The Wall Street Journal, Twitter's board of directors is expected to reject the offer

Jack Dorsey, Twitter's Founder, Slams Twitter's Board

In a series of tweets on Sunday, former Twitter CEO Jack Dorsey blamed the company's board, which is now entrusted with reviewing a buyout bid from billionaire Elon Musk.

  • "It’s consistently been the dysfunction of the company." Dorsey said in response to another Twitter user who described the "plots and coups" that occurred early in Twitter's history
  • Earlier in the discussion, he supported another tweet which read: "Good boards don’t create good companies, but a bad board will kill a company every time."

Tesla CEO Elon Musk's $43 billion offer to buy the firm and take it private is now being considered by the board. On Friday, Twitter's board of directors approved a "poison pill" shareholder rights plan, which allows shareholders to acquire stock at a discount if one person or entity owns at least 15% of the company's outstanding common stock without the board's permission. Before his takeover bid, Musk revealed that he owned more than 9% of the company.

Tender Offer Incoming?

Musk recently tweeted a space with the phrase "is the Night." The tweet sparked speculation that it was a hidden reference to F. Scott Fitzgerald's novel "Tender Is the Night," and that Musk intended to approach Twitter shareholders directly to buy their stock.

Musk could convince the board to drop its opposition and poison pill if he got enough shareholder support by presenting the deal directly to Twitter investors in a tender offer. That, however, is far from guaranteed.

Musk's offer price of $54.20, which he has stated is his best and last offer price, was near to Twitter's stock price of $46 on Wednesday. Musk has stated that he has "sufficient assets" to complete the transaction, but his formal offer did not provide any financial details.

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Daddy Mohlala on Unsplash.