Elon Musk's Twitter Soap Opera Continues: Poison Pill, Thoma Bravo's Competing Bid, Tesla CEO Scouting Partners

Ever since Tesla, Inc. TSLA CEO Elon Musk disclosed a passive stake in Twitter, Inc. TWTR, things have progressed at a frenetic pace.

The Elon Musk-Twitter plot is thickening with the passing of each day, and the weekend brought a lot of twists and turns, making the whole saga further intriguing.

Twitter Swallows Poison Pill: As Musk chose to take the fight to the enemy camp by making a $54.20 per share hostile takeover offer on Thursday, Twitter's board decided to adopt a limited duration shareholders' rights plan, more popularly known as the poison pill, that will run through April 14, 2023.

A poison pill strategy allows shareholders to buy additional shares in a company at a discount, effectively diluting the ownership interest of a predator and also making any potential acquisition costlier.

The decision by Twitter's board, communicated through a press release on Friday, created an uproar among certain quarters. Twitter's board was accused of putting its interest before the interest of shareholders.

Rumors Of Counterbids Emerge: Meanwhile, reports emerged that more bidders may join the fray.

The shareholder rights plan, which Twitter is adopting, may not preclude the company from engaging with parties or accepting an acquisition proposal if the board thinks it is in the best interest of its shareholders, the company had earlier said.

Buyout firm Thoma Bravo is preparing to make a counter offer to buy Twitter and has contacted Twitter's board in this regard, Reuters reported, citing people familiar with the matter. The New York Post had also reported the same on Thursday.

Related Link: Does Elon Musk's About-Face On Twitter Portend 'Game Of Thrones' Battle Ahead?

Musk Rallying People Around: At the same time, The New York Post reported on Friday that Musk is scouting for like-minded individuals to partner with him on the Twitter bid. The partners could soon be announced, the publication said, citing sources.

Among the names being speculated is private-equity firm Silver Lake Partners, which was reportedly planning to co-invest with Musk in 2018, when he was planning to take Tesla private.

What's Next For Twitter? Twitter cannot outrightly reject Musk's proposal. If the company chooses to do so, it has to convince its shareholders by rolling out a viable Plan B that can augment shareholder value. If Thoma Bravo confirms that it is going to be the company's white knight, it will have some wiggle room to work around and take steps to improve the fundamental picture.

Twitter shares are now trading slightly higher than Musk's per-share bid, and at one point after Musk's disclosure of his stake, the stock was trading about $10 higher than the bid price.

Saudi Arabia's Prince Alwaleed bin Talal, one of Twitter's largest shareholders, said in a tweet Musk's offer undervalues the platform.

If Musk is able to mobilize a consortium/partners to table a bid that could be hard for Twitter to reject right in front of its shareholders, the Tesla CEO may finally have the last laugh.

Related Link: Why Cathie Wood's Ark Has Substantially Reduced Its Twitter Stake

Photo: Courtesy of TED Conference on Flickr