Well, he did tweet this:
_______ is the Night
And this:
Love me tender
And so we shouldn’t be entirely surprised that Elon Musk has secured the funding necessary to acquire Twitter, and that he is also exploring whether to commence a tender offer for the company.
As Arjun Singh noted, “Musk has been known before to make cryptic tweets heralding his financial decisions.”
Yup.
Arjun discusses some of the technicalities surrounding where things now stand, and Bloomberg’s Matt Levine goes into more detail here.
As Levine explains, the debate over Twitter’s future has been changed by the fact that Musk has now shown how his offer for the company would be funded. Previously, Levine had argued that the onus had been on Musk to show that he could pay for Twitter, but not any more:
He hasn’t launched his tender offer, and he is not committed to launch it; he could still lose interest and walk away. But he found the money, and the board does have some decisions to make. That doesn’t mean that it has to accept a deal at $54.20, or let Musk take his tender offer directly to the shareholders by getting rid of its poison pill: If the board thinks that the price is too low or the deal is still too uncertain, or if it has another, better bidder, it can still fight. But I do think that the board’s best argument for blowing off Musk, as of yesterday, was probably that he was hard to take seriously without real financing. Now it has to take him seriously.
Rejecting the proposal on the grounds that Musk hadn’t explained how he was going to pay for the stock came with the advantage for the board that it could sidestep any awkward argument about what Twitter is worth (even if it could be said that its earlier adoption of a poison pill showed a certain, uh, anxiety that Musk might indeed find the cash). Now that discussion cannot be avoided, and it’s going to have to involve money. Blathering on about, say, the wider societal implications of a Musk-owned Twitter won’t do the trick. Musk’s proposed offer price of $54.20 remains quite some way above where the stock closed on Thursday ($47.08), suggesting that investors still do not believe that a deal with Musk will go through. Some investors may also be concerned that Musk will sell his stock if the board turns down what he has described as his “best and final offer” (as, indeed, Musk has strongly implied that he will). Even if he were to take his time in selling down that position, the knowledge that there was a potential large seller in the stock could well, as investors know, weigh on the share price.
Yes, the stock was trading at much higher levels a year or so ago (it peaked at around $77 in February 2021), but it’s a different market today, and tech stocks are not as popular as they once were. Nevertheless, despite the premium over the current share price, dismissing the proposed offer on valuation grounds is indeed one route that a board that doesn’t want to sell to Musk might take, bolstered by the fact that the poison pill is there, ready to be deployed, effectively stopping Musk from giving the shareholders the chance to decide for themselves whether $54.20 is good enough for them. Writs would fly, but a court would be highly unlikely to overturn a rejection of the offer on those grounds (nor, for that matter, would a court be likely to overturn the original adoption of the poison pill).
Will the board come back offering to discuss a higher price? Possibly. Not least because Musk would then have to show he had the financing for that. Could the board find someone more in line with its thinking to step in at a higher price? Maybe, but owning Twitter comes with considerable reputational and political risk, and no one has yet found the key to turn it into a money machine.
Interesting times.