November 27, 2022

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Elon Musk reports that he still wants to buy Twitter

Elon Musk reports that he still wants to buy Twitter

On Friday, Elon Musk raised further doubts about whether he had actually ended up buying Twitter, after he posted a message on the platform on Friday that the agreement had been put on hold.

He writes: “The Twitter agreement has been temporarily suspended Suspended information supporting accounts that constitute spam or fake accounts for less than five percent of users.”

In the tweet, he linked a status of Reuters Twitter itself appears to estimate that fake or spam accounts account for less than five percent of the revenue-generating platform’s daily active users.

It may appear that the Tesla boss has confirmed these estimates further. Musk previously tweeted that one of his priorities would be to remove “annoying bots” from the platform.

Friday morning, Musk came up with another update, writing on Twitter that he still intends to buy the company:

At 14:00, Twitter stock was down 11.29 percent in pre-trading. Thus, the price recovered somewhat after falling by 20 percent immediately after the news broke. Tesla shares rose 5.77 percent.

Plunge into pre-trade

Twitter’s share immediately fell 20 percent in pre-trading after the news became known, but it recovered somewhat.

Even before Musk’s announcement on Friday, the company’s market capitalization was $9 billion below its offer price of $44 billion.

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Nordea’s chief investment officer, Robert Ness, believes that Musk is now trying to exit the agreement to buy Twitter.

Nordea Funds Director of Investment Robert Næss.

Nordea Funds Director of Investment Robert Næss. (Photo: Per Ståle Bugjerde)

Since Musk came up with his offer on Twitter, tech stock prices have fallen, and if he had made an offer on Twitter today, this would have been a much cheaper purchase for him. “I think he’s now trying to get out of the agreement,” says Ness.

NICE notes that the high-tech Nasdaq on Wall Street has fallen sharply recently.

– Had it not been for his presentation on Twitter, the price would have fallen as much on the Nasdaq, down at least 20 percent. Ness says Musk’s offer is 20 percent more than today’s price.

If Musk himself chooses to cancel the purchase agreement, he would have to pay $1 billion for breach of contract, so Næss believes he is now looking for a good reason to exit the acquisition.

If you look at the entire acquisition value it’s not the big deal, but if you look at the acquisition value versus the recent tech dip, today’s bid would be 20 percent cheaper for him, says Ness.

Doubt grows

This week has both Reuters and Washington Post It raised doubts about whether the acquisition would ever be completed. The furthest went to Reuters, who stated this Elon Musk likely won’t buy Twitter.

Analytics firm Hindenburg Research wrote in an analysis this week that it believes Musk will buy Twitter at a lower price than now agreed, and points to, among other things, the overall decline in tech stocks.

“We are optimistic about Musk’s attempt to remove Twitter from the stock market, and see a high probability that the agreement will be entered at a lower price,” Hindenburg said in the analysis. Reprinted in the Guardian newspaper.

Even if Musk and the company’s board of directors agree to the Twitter agreement once, there are still several hurdles to overcome before Musk eventually becomes the personal owner of the company and takes it off the exchange:(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.

  • financing. must hold According to the New York Times He paid $13 billion in bank loans and $12.5 billion in loans secured by his shares in Tesla, where he owns 16%. Musk will pay $21 billion in cash out of his own money, without specifying in the agreement where the money will come from. Musk sold Tesla shares for $8.4 billion two weeks ago, and also announced that he would not sell more shares in the company to fund the acquisition. This week it became known that Musk, in collaboration with about two dozen investors, such as Larry Ellison, the Qatari government investment fund and crypto exchange Binance, had secured $7.1 billion in funding.
  • The majority of Twitter shareholders should follow the board’s recommendation to sell. Some think the price is too low, and last summer the price was over $70.
  • Divorce fee. It became known this week from a filing with the US Financial Supervisory Authority (SEC) that there is a mutual agreement between Twitter and Musk over a $1 billion “breakup fee” if one of the parties breaks out of the agreement. A volume of about 2.5 percent of the total agreement is considered normal for such agreements. For Musk, it might be worth incurring such a loss if the deal hurts Tesla or he’s cold for other reasons, and he can take it, too.
  • Tesla’s board can cancel the agreement with Musk if there is a new and better offer, in exchange for paying a “break-up fee”.
  • Tesla shares fell about 30 percent after news of the Twitter acquisition. said Robert Ness, chief investment officer at Nordea Fondene to dn That this may be a combination of the fact that he may have to raise money from Tesla to fund the acquisition, and that he will spend less time in the future developing Tesla.
  • China problem. Tesla produces half of the cars and gets a third of the revenue from China. Twitter, for its part, has been at odds with Beijing for years, especially over the erosion of democracy in Hong Kong.