After Elon Musk’s $43 billion pitch to buy Twitter, Apollo Global Management Inc is considering to participate in the bid, Reuters reported quoting sources. According to reports in WSJ, PE firm Apollo Global Management Inc is considering ways it can provide financing to any deal and is also open to working with Elon Musk or any other bidder. However, there is no guarantee that Twitter would be accepting the Yahoo owner’s deal, or any other deal in the future. The microblogging giant is likely to even rebuff Musk’s offer, sources told Fox Business.
The report further said that the firm’s contribution will be through its credit investment platform rather than its private equity business. However, Apollo is not the first private equity firm to have expressed interest, several others want to participate in a deal for Twitter Inc., the report further mentioned.
Musk’s Plan For a Hostile Takeover
Last week, Tesla CEO Elon Musk had said that he wants to buy Twitter, taking it private to restore its commitment of “free speech.” After the proposal, various investors, and analysts expect Twitter Inc’s board of directors to reject Elon Musk’s $43 billion acquisition offer in the coming days as inadequate.
Twitter Pops a Poison Pill
In a move to defend itself, Twitter had announced a plan on Friday which said that it would allow shareholders to purchase additional stock. Twitter’s board unanimously adopted a so-called shareholder rights plan, also known as a “poison pill“. In its statement the company said that “The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium.”
This means that what the Twitter board unanimously agreed upon is actually called a limited duration shareholder rights plan. So, the “poison pill” is a process in which the existing shareholders get an option to buy more shares at a lower price, effectively diluting a new, hostile party’s ownership stake. However, while the poison pill strategy will make the ‘coercive’ takeover difficult, it is bad for all shareholders in the near term.
Elsewhere, on Monday, Musk said that if his bid to take over the company succeeds then the micro-blogging site will likely save $3 million a year on board members’ salary. Elon Musk took to Twitter to share, “board salary will be $0 if my bid succeeds, so that’s $3 million per year saved right there.”
Musk tweeted, “the board serves to represent shareholders. If they refuse to act in the best interest of shareholders, they should be removed and replaced by new board members who understand their fiduciary obligations,” he responded to a tweet by investment advisor Gary Black who pointed out that Twitter boards’ interests are not aligned with the shareholders.
Additionally, Black explained that if Tesla and SpaceX CEO takes over Twitter, then in that case the board members would lose their $250K-$300K annual salaried jobs. Black tweeted, “let me point out something obvious: If Elon Musk takes Twitter private, the Twitter board members don’t have jobs anymore, which pays them $250K-$300K per year for what is a nice part-time job. That could explain a lot.”
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