Musk, the CEO of electric carmaker Tesla Inc, has been meeting with Twitter shareholders in recent days to seek support for his bid. He has stated that Twitter must be taken private in order to grow and become a genuine platform for free speech.

Twitter Inc began talks with Elon Musk on Sunday after wooing many of the social media company’s shareholders with financing details on his $43 billion acquisition offer, according to people familiar with the matter.

According to the sources, the company’s decision to engage with Musk earlier on Sunday does not imply that it will accept his $54.20 per share bid. It does, however, imply that Twitter is now investigating whether a sale of the company to Musk on favorable terms is possible, according to the sources.

Musk, the CEO of electric carmaker Tesla Inc, has been meeting with Twitter shareholders in recent days to seek support for his bid. He has stated that Twitter must be taken private in order to grow and become a successful company.

Many Twitter shareholders contacted the company after Musk outlined a detailed financing plan for his bid on Thursday, urging it not to let the opportunity for a deal pass them by, according to Reuters earlier on Sunday.

According to the sources, Musk’s insistence that his bid for Twitter is his “best and final” has proven to be a stumbling block in the deal negotiations. Nonetheless, Twitter’s board of directors has decided to engage with Musk in order to gather more information on his ability to complete the deal and potentially negotiate better terms, according to the sources.

According to the sources, Twitter has not yet decided whether to pursue a sale in order to put pressure on Musk to raise his bid. Because the deal discussions are private, those with knowledge of the situation declined to be identified.

According to one of the sources, Twitter wants to know more about any ongoing investigations into Musk by regulators, including the Securities and Exchange Commission (SEC), that could jeopardize the deal’s completion.

According to securities lawyers, Musk, who settled charges that he misled investors four years ago by claiming he had secured funding to take Tesla private, may have violated SEC disclosure rules when he acquired a stake in Twitter earlier this year.

According to the source, Twitter is also investigating whether regulators in any of the major markets in which it operates would object to Musk owning the company. According to the sources, if Twitter determines that a sale to Musk would be risky, it may demand a sizable break-up fee.

Following Musk’s offer, the social media company implemented a poison pill to prevent him from increasing his more than 9% stake in the company to 15% without first negotiating with its board. Musk has responded by threatening to launch a tender offer in order to gain Twitter shareholder support for his bid.

According to the sources, Twitter’s board was concerned that unless it sought to negotiate a deal with Musk, many shareholders would support him in a tender offer.

While the poison pill would prevent Twitter shareholders from tendering their shares, the company is concerned that going against the wishes of many of its investors would significantly weaken its bargaining position.

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

Earlier on Sunday, the Wall Street Journal reported that Musk and Twitter would meet to discuss the acquisition offer.


According to the sources, Twitter shareholders’ price expectations for the deal differ largely based on their investment strategy.

According to the sources, active long-term shareholders, who together with index funds own the majority of Twitter shares, have higher price expectations, with some in the $60s per share. They are also more likely to give Parag Agrawal, who took over as CEO of Twitter in November, more time to increase the value of the company’s stock, according to the sources.

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

According to the sources, one silver lining for Twitter’s board is that Musk’s offer did not appear to convert a significant portion of his army of 83 million Twitter followers into new shareholders in the San Francisco-based company who could support his bid.

According to the sources, Twitter’s retail investor base has increased from about 20% before Musk announced his stake on April 4 to around 22%.