Is it possible to stop Elon Musk from taking over Twitter?

According to a filing with the Securities and Exchange Commission, Musk on Thursday offered to buy all of the shares of Twitter (TWTR) that he does not hold for $41.4 billion.
The ball is now in Twitter’s hands. The board of directors of Twitter, which Musk declined a seat on last weekend, will have to decide whether to meet with Musk — a successful but sometimes erratic entrepreneur who recently suggested Twitter may be dying and that it should consider dropping the “w” from its name — or pursue other options, including potentially seeking alternative buyers.
“There are three possibilities on the board: They can do it alone and say, “Get lost, we’re OK,” for example “Donna Hitscherich, a senior lecturer at Columbia Business School, echoed this sentiment. “Two, they have the option of engaging with Musk at this price or at an other price. Three, they may be able to discover someone they like.”
However, with all three choices, Twitter and its workers look to be in for some inconvenience in the next days and weeks.
According to a report from CNBC, Twitter’s board of directors will meet at 10 a.m. ET on Thursday to examine the offer. According to a Twitter insider, the firm will host an all-hands meeting with employees later today to address Musk’s takeover attempt. The following is an excerpt from Twitter CEO Parag Agarwal’s internal letter to employees: “It’s critical that we all join together as #OneTeam today. Please join me for an all-hands meeting at 2:05 p.m. PT. We’ll talk about today’s news and what’s coming up tomorrow.”
Twitter will not comment on the board meeting’s scheduling or reports of an all-hands meeting.
Musk stated in his offer letter to the firm that he feels “Twitter needs to be converted as a private company.” He said, ” “Twitter has tremendous potential. It will be unlocked by me.”
Musk did recognise that the path ahead is unpredictable. In an interview with TED on Thursday afternoon, he stated, “I’m not sure I’ll be able to obtain it.”
It’s possible that the board of directors, who has a fiduciary obligation to propose what’s best for the company’s shareholders, will decide that Musk’s offer is good enough to accept. Musk’s offer of $54.20 a share represents an 18% premium over Wednesday’s closing price and a 38 percent premium over the closing price on April 1, the last trading day before Musk disclosed his more than 9% investment in Twitter.
“The offer appears to be very attractive and well priced, and the board, with all of its fiduciary obligations, will have to examine it carefully to see if it’s a fair price and, of course, if the takeover makes sense to everyone in the long run,” said Mike Useem, a management professor at the University of Pennsylvania’s Wharton School.
He went on to say that the board may think about what an acquisition by Tesla (TSLA) and SpaceX CEO Elon Musk would entail for the platform’s staff and users, some of whom have expressed worries about Musk’s influence. However, the board’s first focus will most likely be the impact on shareholders.
Still, Kenneth Henderson, a partner at law firm Bryan Cave Leighton Paisner, believes the board will not just say, “Yes, thank you very much, and accept the offer.” The board will likely examine and debate with attorneys and bankers how Musk’s offer compares to the business’s potential long-term worth if it continues on its present course as a public company with its current strategy as part of its decision-making process.
“In our opinion, the acquisition does not get done at this level, and Twitter’s Board will not consider this offer, or Mr. Musk driving a change in the company, as being in the company’s or shareholders’ best interests,” Wedbush analyst Ygal Arounian said in an investment note on Thursday. Musk’s offer is significantly below the almost $72 that Twitter’s shares was trading at last July following a solid earnings report, albeit being higher than recent trading levels.
The concept of a Musk buyout does not appear to be popular among Twitter’s shareholders. Another significant Twitter stakeholder, billionaire Saudi Prince Alwaleed bin Talal, who controls the investment business Kingdom Holding Company in Saudi Arabia, tweeted Thursday that the offer “comes nowhere near the real worth of @Twitter given its development possibilities… I reject this offer.”
Twitter’s shares moved a little on Thursday but stayed fairly steady at $46, significantly below Musk’s bid price, suggesting some hesitancy about the transaction or investor doubt that it would go through. (It might also indicate uncertainty about Musk’s commitment to complete the acquisition, given that he was in hot water with authorities in 2018 after fraudulently claiming that he had secured money to take Tesla private.)
If the board refuses to work with Musk, it may have a few other choices. Musk’s offer might prompt other would-be Twitter owners to submit their own offers, possibly at a greater price. Twitter has been a target for purchase in the past, but due to recent antitrust probes, some of its potential buyers – its larger rivals — may be hesitant to make bids.
The board might also immediately implement a “poison pill,” a corporate anti-takeover measure in which all shareholders except a hostile party have the opportunity to acquire more shares at a steep discount, substantially diminishing the hostile party’s interest in the firm. Such a move would most likely take place if Musk wanted to launch a “tender offer” to acquire shares in bulk directly from shareholders, maybe as a strategy to bolster his influence over the firm or circumvent the board. While it is unlikely to halt Musk in his tracks, Henderson believes it might help bring him to the bargaining table to discuss a higher price.
Still, it could be in the board’s best interests to make as much progress as possible with Musk. Musk stated in his filing that Thursday’s offer was his “best and last” offer, and that if the board refused, he would “need to reevaluate my status as a shareholder.” If Musk sells his Twitter investment, it might be terrible news for the company’s stock price and leadership team.
Musk, too, may benefit from a collaborative approach. “It’s better to keep it amicable because… [Musk] wants to be able to undertake due diligence and understand the business,” Hitscherich explained.