Key Takeaways:
- Elon Musk has turned to Silver Lake Partners to find support in his Twitter takeover plans
- Twitter's Board of Direcotors had rejected the Tesla CEO's $43 billion buyout offer
- Former Twitter CEO Jack Dorsey has come out to support Musk in his battle with the board
YEREVAN (CoinChapter.com) – Tesla CEO Elon Musk does not want to give up plans for his hostile takeover of Twitter. After facing rejection from the company’s Board of Directors, the world’s richest man is trying new tricks up his sleeve. He has approached investment firms, including Silver Lake Partners, to help him gain control of the social media giant.
Musk already has a history with the California-based private equity firm. He was in talks with Silver Lake Partners and Goldman Sachs on a similar proposal to take Tesla private in 2018. However, the plan did not materialize, resulting in a lawsuit against him.
Earlier this month, Musk announced he had made an offer to buy Twitter for $43 billion. The generous yet hostile offer placed a price of $54.20 per share, a 54% premium over the previous day’s closing value. The move came after the billionaire made public his purchase of 9.2% shares and subsequently declined a seat on the company’s board. According to the company’s rules, accepting the offer would have restricted him to owning just 15% of Twitter.
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Jack Dorsey supports Musk
Faced with an “Elon Musk problem,” the company decided to reject the billionaire’s offer by swallowing a poison pill. In the corporate world, companies adopt this strategy to prevent any hostile entity from acquiring company control. If not impossible, Twitter will flood the market with cheap shares to make a takeover hard. Moreover, due to the Limited Duration Shareholders Rights Plan, Musk’s shares will dilute, making him unable to own a sizable majority.
Such a strategy will typically come into effect if Musk’s stake crosses the 15% mark. The SpaceX chief threatened to walk away from the company as an investor if his offer was rejected.
“My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,”
he wrote to the board.
In addition, Musk has accused the company’s board of working contrary to the interest of the shareholders. In reply to a Twitter user, he also pointed out how the board does not care about the company because they own almost no shares. Jack Dorey is the only one with a relatively sizeable 2.253% share, but he leaves the board next month.
While the Twitter board may not like Musk’s criticism, former CEO Jack Dorsey does. He claimed the Twitter board of directors has “consistently been the dysfunction of the company.”
Dorsey also agreed with the sentiment that the bad Twitter board would end up killing the company, effectively adding ammunition to Musk’s arsenal against the board.
Musk’s previous romance with Silver Lake Partners failed to take Tesla private. So it remains to be seen if, this time, his plan will succeed.
