Not to be outdone by the new U.K. government and its reversal on tax cuts, Elon Musk stunned Wall Street with a bigger U-turn, reviving his original bid for Twitter (TWTR) of $54.20 per share. Musk’s move came just days before his scheduled deposition in the Delaware trial over the deal and after the release of texts leading up to the original offer.
Investors can only speculate as to Musk’s motives. But whether you think he caved to avoid awkward questions about deleted texts, saw no chance of victory in Delaware, strategically delayed to shore up financing or something else, the $44B deal looks tentatively back on.
After a long news-pending halt, Twitter shares closed up 22% on Tuesday at $52, with a small arb gap for any further twists and turns. In an updated SEC filing, Musk attached the letter his attorneys sent to Twitter offering to pay as originally agreed (bots or no bots). He proposed going through with the deal pending a stay of the Twitter v. Musk et al. trial action, as well as receiving the debt financing. That debt financing could be trickier now with the 10-year Treasury yield (US10Y) at 3.70%. It stood at 2.83% on the day Musk first made his offer in April.
Twitter acknowledged the letter, saying: “We received the letter from the Musk parties which they have filed with the SEC. The intention of the Company is to close the transaction at $54.20 per share.” But citing unnamed people close to Twitter, several outlets reported that the social media company was wary about Musk’s move and thought it may just be a tactic to delay the trial in Delaware Chancery Court due to begin on Oct. 17.
“This is a clear sign that Musk recognized heading into Delaware Court that the chances of winning vs. Twitter board was highly unlikely and this $44 billion deal was going to be completed one way or another,” Wedbush’s Dan Ives said. “We see minimal regulatory risk in this deal although now Musk owning the Twitter platform will cause a firestorm of worries and questions looking ahead among users and the Beltway. This is a smart move for Musk to go ahead with the deal given the legal hurdles that were ahead into Delaware.”
Everything app: For his part, Musk at least sounded like the happy acquirer of Twitter again, taking to the platform with his first substantial comment since the dramatic developments.
“Buying Twitter is an accelerant to creating X, the everything app,” Musk tweeted Tuesday evening – referring to his previous idea for creating something of a Twitter rival using his currently inactive X.com Internet domain.
Responding to a user who suggested it would be easier to start X from scratch, Musk said “Twitter probably accelerates X by 3 to 5 years, but I could be wrong” – reiterating a point of view he expressed in August.
Musk’s hints (after he publicly tried to back out of the Twitter deal) that he would start a competing service became part of the record in the case deciding the deal’s fate. “It’s important to keep in mind the person to whom we’re being asked to turn this data over to,” Twitter’s attorneys said in an August hearing. “This is someone who has publicly mocked Twitter for seeking to enforce a nondisclosure agreement. Who has insinuated that this litigation would be used as a vehicle for publicly disclosing Twitter’s internal data. And who recently and publicly reaffirmed that if he is able to get out from the contract that he signed, his plan is to start a competing business: X.com.” (54 comments)
Crude oil (CL1:COM) (CO1:COM) (USO) (BNO) is pulling back this morning after running up into today’s OPEC+ meeting in Vienna.
There are reports the group will consider cutting production by as much as 2M bbl/day at this week’s meeting, compared with prior reports of a 1M bbl/day cut. A production cut could be the cartel’s largest reduction since those at the outset of the COVID-19 pandemic in 2020, but the actual impact on global oil supply could be less significant than the headline number would suggest, as some members already are pumping well below their official targets. They could automatically be in compliance with new limits without actually reducing production.
Goldman Sachs analysts said Tuesday they remain constructive on the energy sector in the current macro environment and expect Q4 “will be another strong quarter for the group, as key macro drivers remain elevated, despite a softening in Q3.” (28 comments)
Famed activist investor Carl Icahn is said to have amassed a well over $500 million stake in social media company Twitter that paid off Tuesday. Icahn paid in the mid-$30s for his stock, which means profit for his Icahn Enterprises L.P. (IEP) may be over $250 million, according to a WSJ report.
Other notable hedge funds including D.E. Shaw and Dan Loeb’s Third Point also took stakes in Twitter in recent months and are expected to make some nice gains. (17 comments)
Morgan Stanley stayed bullish on Rivian Automotive (RIVN) following the electric vehicle maker’s Q3 deliveries report and reiterated full-year guidance. The firm has an Overweight rating on Rivian and a price target of $60 represents almost 67% upside potential for shares from the current level. Rivian topped out at $179.47 per share last year when the IPO created huge early buzz.
“We believe Rivian should be able to get most (if not all of) FY23 behind them before they would need more capital. Our model currently assumes a $3bn equity raise in FY23, $2bn in FY24 and $1bn in FY25,” Morgan Stanley lead analyst Adam Jonas said. (15 comments)
Be the first to comment