The real meaning of Elon Musk’s ‘tender offer’ explained

Bruno Cooke April 19, 2022
The real meaning of Elon Musk’s ‘tender offer’ explained
Photo illustration by Jakub Porzycki/NurPhoto via Getty Images


Commentary on mercurial billionaire Elon Musk’s potential takeover of social network Twitter is mired in metaphor and poeticisms – poison pills, white knights and “Love Me Tender”… What is the meaning of Elon Musk’s “tender offer” for Twitter investors, and where does the so-called “poison pill” fit in?

Elon Musk’s ‘tender offer’ meaning explained

Musk’s strategy to buy Twitter via an unsolicited offer of $54.20 per share is known as a “tender offer”. 

A tender offer is a bid to purchase some – or all – of shareholders’ stock in a corporation. Tender offers, such as Elon Musk’s offer of $54.20 per Twitter share, invite shareholders to sell their shares for a specific price, usually within a specific timeframe. 

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Investopedia defines a “tender” – in the context of corporate takeovers and business dealings – as “an invitation to bid for a project or accept a formal offer”.

So, for those who imagined Elon Musk’s offer as being particularly kind and compassionate (as in tenderhearted) or succulent and juicy (as in tenderised), think again. 

It is a public callout to shareholders of a company – in this case, Twitter – requesting they tender (i.e, sell) their stock for x amount per share, by y date.

How have people reacted to Elon Musk’s ‘tender offer’ Twitter takeover attempt?

Musk’s bid values Twitter at $43 billion. But the decision to accept or reject the offer lies with the company’s board of directors, not shareholders.

The board is elected by shareholders to carry out strategic decisions, the Washington Post cites Stanford business professor David Larcker as saying. 

“Inside the boardroom,” Larcker says, “what they’re trying to figure out is, ‘Here’s the offer we have on the table. Here’s the strategy we have in place, and here’s what the value could be’.”

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What does ‘poison pill’ mean in conversations about Musk’s offer?

On Friday (15 April 2022), the board put in place a “poison pill”, aka a shareholder rights plan. This makes it more expensive for Musk (or anyone else) to increase their stake in the company beyond 15%. Musk currently owns about 9% of the company. However, he has indicated that he’d sell his shares if Twitter’s board doesn’t accept his offer.

Another possibility is that Twitter’s board of directors finds a “white knight” – an alternative buyer. 

Meanwhile, Elon Musk’s Twitter poll, which asks whether the decision to accept the offer should be up to the board or shareholders, has received nearly 3 million votes. 83.5% have voted in favour of shareholders. But note: it is not a scientific study.

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Bruno is a novelist, amateur screenwriter and journalist with interests in digital media, storytelling, film and politics. He’s lived in France, China, Sri Lanka and the Philippines, but returned to the UK for a degree (and because of the pandemic) in 2020. His articles have appeared in Groundviews, Forge Press and The Friday Poem, and most are readable on Medium or