Elon's offer is not a hostile offer. He has made an offer, management has not yet rejected it. It is just an offer to purchase the company, as of now.

If the offer is rejected and Elon continues to attempt to gain control of the company, that would be an attempt at a hostile takeover.

The offer is technically hostile because it was unsolicited, and the offer was made at the same time he indicated he wanted to buy-out the company (usually there's a gap).

A more typical way of doing this would be to make a proposal directly to the board first. The fact that Elon did it in public means he's trying to pressure the board (via the shareholders) into taking an action they wouldn't otherwise want to take which makes it hostile.

I dunno, this seems a lot like a rejection.

Hostile, in financial terms, is whenever the board or CEO did not initiate a conversation around an acquisition, and it is just made to the company.

No it isn't. They key is that management and board are against it and the deal is still pursued by the (potential) acquirer. It is perfectly possible to initiate a conversation regarding an acquisition and this is not a hostile takeover per-se though it could develop into one.

https://www.investopedia.com/terms/h/hostiletakeover.asp

Musk made an unsolicited, and what seems to be a non-investment choice, purchase of almost 10% of the shares and wanted to join the board. As far as I can tell, the board made his board seat contingent on Musk not buying more than 14.9% and Musk said no, and a few days later offered to buy the company outright. Now Twitter is taking moves to prevent a hostile takeover. That sounds like a hostile takeover to me.

I'm not acting at all, I'm just nailing down what a hostile takeover bid is because there seems to be some lack of clarity about that.

I misread the context of your comment.

np, it happens.

Just to clarify, that does make Musk's offer a hostile takeover bid, as is also stated in that link.

Yes it does, and this is underlined by the fact that they adopted the poison pill proposal. Though, in the past such tactics have been used just to get a better price, in investment banking 'no' doesn't really always mean 'no', it may just mean 'really, no, not at this price'. That said this is already a pretty premium and they might end up regretting that move if they really are after the money and don't have a different motivation.

they->the

What? This is not just wrong, it's comical to even think of what it would mean if it were true. The board would have to clairvoyantly foresee any possible acquirer who might be interested in the company, or else reach out to every company and individual in the world, stating its willingness - or otherwise - to be acquired. That would be, uh, quite something.

No, right now it is an unsolicited offer. That doesn’t mean hostile, in financial terms.

Offers aren't hostile. Trying to take over a company after an offer has been rejected is hostile.

Not necessarily, the offer could be amended and increased that's perfectly normal and still not hostile. Hostile is when you pursue against the wishes of the current owners of the company and their management, so in other words if they have indicated that they are either not for sale or that they are not going to sell their shares to you.

You could then try for a hostile takeover by buying up as much as you can on the open market and possibly to try to get one or two smaller shareholders to sell their shares to get you more than 51% (and in some cases more than 66% aka a supermajority) to be able to call the shots.

Even then, the Twitter board has staggered terms, so it is impossible to do a wholesale replacement of the board and thereby gain control of Twitter. The board voted unanimously to invoke the poison pill provisions in the bylaws so it isn't a matter of swaying a small number of board members.

Tender offers can be hostile - a "hostile tender offer" is an offer directly to shareholders to buy shares at a certain price, without getting the blessing of the board.

It would be simple for them to say 'this is not a serious offer' no matter the premium that is a good faith way of rejecting it.

I could offer them $150 a share tomorrow, contingent on financing and would get laughed out of the room.

You're not the richest man in the world. It works different if you happen to be though.

Of course it does, but we also have no idea what happened behind the scenes and the board does. He turned down joining the board last week basically because he could act like a troll if he did (I’m being facetious). Calling musk the richest man in the world is also kind of silly because he’s not offering to stock swap for Tesla shares…he has a lot of theoretical wealth, which as with many factors would play in the boards decision about whether this is serious.

My point is that the number on the offer is not an objective and singular measure of whether this is a good deal for Twitter. Who is making the offer clearly matters as well to how serious it is.

Once Elon owns the company, HE is the one taking the risk on the loan -- NOT the board of directors.

Hmm, not sure I understand what you are saying here. If Elon gets a loan using his Tesla stock as a guarantee, the risk is solely his. If he puts together a consortium to do the purchase, then that group is taking the risk. It doesn't matter though, given the Twitter bylaws, if the Board doesn't want it to happen it won't happen.

What's wrong with a leveraged buyout, for example? It seems like the norm these days, not the exception.

Twitter already has a lot of debt, far too much to fund this.

Twitter has no equity. There's nothing to leverage.

Unless I'm missing something, 'leveraged buyout' doesn't specify that it's Twitter's equity which has to be leveraged. Off the top of my head, I think Elon Musk has some other bits and pieces which he could scrounge together for collateral.

No, leveraged buyout means you use the equity of the company purchased as the backing for the loan.

If you borrow from somewhere else it’s just a buyout.

Hm, that doesn’t sound right, and Wikipedia agrees with my understanding, that an LBO means the buyer borrows money for it:

>> A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company.

Note how the second sentence says that the assets of the purchased company can be part of the arrangement, but the “L” in LBO means the buyer’s borrowing, however they accomplish that.

https://en.wikipedia.org/wiki/Leveraged_buyout

What exactly would be the risk for the board?

What if Tesla stock tanks (it could happen) forcing Elon to sell stock to repay his debt incurred to buy Twitter. He could decide to dump Twitter instead in a fire sale, massively undercutting its value and hurting it in the way Yahoo and AOL were hurt by the constant swaps.

Elon's offer is not a hostile takeover, it is just that - an offer.