Topline
Shares of Twitter added to recent gains and jumped more than 5% on Monday after the social media company formally accepted a roughly $44 billion buyout offer from Tesla billionaire Elon Musk.
Twitter could announce a deal by later today.
Key Facts
Twitter’s stock moved higher again on Monday as investors cheered reports that the company’s board of directors have been negotiating with Musk, with a deal announced later in the afternoon.
Twitter’s board has decided to sell the company, accepting Musk’s original offer of $54.20 per share in cash, which values the company at around $44 billion.
The transaction was unanimously approved by Twitter’s board of directors, with the deal expected to close later in 2022 pending shareholder approval.
Twitter was until recently expected to decline Musk’s offer to buy the company and take it private, having adopted a so-called poison pill to fend off any hostile takeover.
The board appeared to be more receptive to Musk’s acquisition offer in recent days, especially after the Tesla billionaire revealed in an SEC filing last week that he had secured $46.5 billion in financing.
The latest news “likely came from the Board's realization that an alternative bid from a ‘white knight’ may be difficult to come by, especially following the decline in asset prices from social media companies in recent weeks/months,” says Angelo Zino, senior equity analyst at CFRA.
Surprising Fact:
Twitter’s stock is up over 30% this month, with the majority of gains coming after Musk first announced his offer to buy the social media platform earlier this month.
What To Watch For:
The world’s richest person, Musk, has secured $25.5 billion of fully committed debt and margin loan financing for the deal, as well as approximately $21.0 billion in equity commitments, according to a press release.
“The Board’s willingness to have a constructive conversation along with financing in place improves the likelihood that a deal could come to fruition,” said Zino earlier on Monday. “Despite Twitter’s tactic to instill a ‘poison pill,’ it appears that Elon does have the Board backed into a corner.”
Key Background:
Wall Street analysts were largely split when Musk first went public with his unsolicited offer to buy Twitter earlier this month. Some experts predicted that the “soap opera” would end with Musk acquiring the company, while others remained highly skeptical and downgraded Twitter’s stock amid the uncertainty. The vast majority of analysts maintain a “hold” rating on Twitter shares as the market waits to see what happens with Musk’s potential takeover.
Further Reading:
Twitter Poised To Accept Elon Musk’s Acquisition Offer, Reports Say (Forbes)
Elon Musk Has Secured $46.5 Billion In Financing For Twitter Bid, Considers Tender Offer (Forbes)
Twitter Board Adopts Poison Pill To Fend Off Elon Musk’s Takeover Bid (Forbes)
Distraction Or Hostile Takeover? Here’s What Analysts Say About Elon Musk’s Offer To Buy Twitter (Forbes)
