And The Saga Continues… Elon Musk Makes a $43 Billion Offer to Acquire All Shares of Twitter.

The bid for a takeover

Billionaire entrepreneur and Twitter’s largest shareholder, Elon Musk, once again set the world ablaze yesterday when he made an offer to take Twitter private with an offer of $43 billion cash takeover. 

The news came a little over a week after Musk claimed a 9% “passive” stake in the social media giant. Back then, Jill Fisch, a securities law professor at the University of Pennsylvania commented that “the idea that Elon Musk falls within a passive category is probably a stretch. He’s not the most passive guy. Is Elon Musk really going to be happy with a stake of this size, and remaining passive?”. 

True to the professor’s argument, the latest developments confirm the fact that the entrepreneur prefers to become more actively involved with the management of the platform. In a filing with the U.S. Securities and Exchange Commission (SEC) on Thursday, the billionaire offered to pay shareholders $54.20 per share in cash, calling it his “best and final offer”. The price he offers amounts to a 38% premium compared to April 1st, the last trading day before news of his 9% stake in the social media platform broke out. 

The impact of Musk’s offer on Twitter shares

The platform’s shares surged 4% just as news of the $43 billion all-cash bid went public on Thursday, only to fall in the afternoon session. The minimal changes to the company’s shares in New York yesterday afternoon are a telltale sign that there are concerns and doubts about whether the business mogul will be successful in his attempts for a complete takeover. 

What’s to come?

In their statement, Twitter publicly acknowledged and confirmed Musk’s latest bid, adding that they intend to “carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.

But, even though Musk’s “best and final offer” represents a 38% increase to the company’s April 1st close, still, Brent Thill, equity research analyst at Jefferies, states that “No one believes this is the final price. No board in America is going to take that number”. Indeed, Musk’s offer is considerably lower than the price that the company’s shares mostly traded in 2021. For much of the past year, Twitter’s shares were trading at an average of $60 to $70. Likewise, the board, too, views Musk’s takeover offer as “unwelcome”. Twitter’s shareholder, Saudi Arabia’s Prince Alwaleed bin Talal, shared his negative sentiments by tweeting “I don’t believe that the proposed offer by @elonmusk ($54.20) comes close to the intrinsic value of @Twitter given its growth prospects. Being one of the largest & long-term shareholders of Twitter, @Kingdom_KHC & I reject this offer.” 

Though it remains to be seen if the board will reject yesterday’s offer, the entrepreneur told the audience during a TED2022 conference on Thursday that “there is” a Plan B if his offer is not accepted, admitting at some point that “I don’t like to lose, not many people do.” It’s clear that for Elon Musk, it is very important to have “a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization… I don’t care about the economics at all.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.

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