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Sunday, May 22, 2022

Elon Musk may slash $44B Twitter purchase price: ‘He keeps all the cards’

Elon Musk’s take on Twitter could cost him less than $44 billion, according to an investment firm that bets against shares of the social-media giant, which he pitched last month.

Hindenburg Research, a firm specializing in activist short-selling, says Musk has enough leverage to walk away from the deal and threaten Twitter’s board to agree to a lower purchase price.

“Musk holds all the cards here,” Hindenburg, who has a short position on Twitter, said in a report.

“If Elon Musk’s bid for Twitter disappears tomorrow, Twitter’s equity will drop 50% from current levels. As a result, we see a significant risk that the deal goes down.”

Twitter shares were trading down about 2.67% as of noon on the East Coast. At $47.76 per share, it was the lowest since Musk offered $54.20 per share last month.

The post has sought comment from Twitter.

“We support Musk’s efforts to keep Twitter private and see a significant chance that the deal will close at a lower price,” Hindenburg said.

Musk last month offered to buy Twitter for $54.20 a share, but on Monday it was trading for less than $48 a share.
Reuters

The short-seller said that the deal has undergone several developments, from financing to board approval, which could weaken the company’s position.

Hindenburg said Musk could pay the $1 billion breakup fee and take advantage of renegotiating if he so desired.

Last month, Twitter secured a $44 billion cash deal to sell itself to Musk and raised more than $7 billion in funding from high-profile investors including Oracle co-founder Larry Ellison and Sequoia Capital.

The Post reported that Musk was closing in on raising $10 billion in cash from equity co-investors — mostly venture capital firms that have backed his other companies like SpaceX.

The filing lists 19 investors, including billionaire Saudi Prince Alwaleed bin Talal bin Abdulaziz Al-Saud.

Musk has already raised more than $7 billion in funding for his acquisition of Twitter.
Musk has already raised about $10 billion in funding for his acquisition of Twitter.
Reuters

The Saudi royal, which initially rejected Musk’s takeover bid, saying it was too low, is now apparently ready to contribute 35 million of its own shares to Twitter — $1.9 billion. Musk takes the firm privately to maintain the one-time investment, according to the filing.

Alison is the seventh richest person with a net worth of $105.7 billion. The filing shows that Sequoia has pledged $800 million, while willing to invest $1 billion.

VyCapital ($700 million), cryptocurrency exchange firm Binance ($500 million), and venture capitalist Andreessen Horowitz ($400 million) have also pledged funds.

The filing showed that Musk will continue to negotiate with existing holders of Twitter, including Jack Dorsey, the former head of the company, to contribute shares to the proposed acquisition.

post with wires

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