Twitter Is Stuck With Musk’s $44 Billion Deal

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Don’t expect another bidder to emerge for Twitter, which agreed to sell itself to Elon Musk in a deal valued at about $44 billion.

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On Monday, Twitter (ticker: TWTR) accepted Musk’s $54.20-a-share offer for the social-media platform. The deal includes $21 billion in equity, as well as $25.5 billion of fully committed debt and margin loan financing, a statement said, It is expected to close later in 2022.

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Twitter’s stock was down Tuesday by more than 3%, trading at $49.97.

Twitter searched all around the globe for a second bidder but failed to discover one, said Dan Ives, a senior equity research analyst at Wedbush Securities. “We believe if a second bidder, white knight were to come in, the board would’ve found him. They came up empty-handed which is why they had to sign, pen to paper, with Musk,” Ives said.

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Twitter declined to comment to Barron’s,

Musk is also paying a good price for Twitter, though some stockholders were said to be holding out for $60 a share. “Twitter shareholders are popping the Champagne, or drinking whiskey, because they’re happy they got this price. There’s a better chance of me playing in the NBA playoffs than them getting $60 a share,” Ives quipped.

It’s very unlikely another bidder can match Musk’s offer, said Matthew Epstein, managing partner and founder of Newbold Partners, a fintech-focused boutique investment bank. The billionaire is supplying the $21 billion of equity. He’s also taking out a risky $12.5 billion margin loan that was secured using Tesla stock (TSLA), according to Securities and Exchange Commission filings, (Several banks have committed to provide $13 billion in loans.) “Few others have that type of capital available to them,” Epstein said.


Private equity was expected to take part in Musk’s bid. Musk last week was in talks with Thoma Bravo on joining on a bid, the New York Post reported, Apollo Global Management (APO) had also discussed financing a possible takeover offer for Twitter, Barron’s reported. The firms weren’t listed in the announcement of the deal. Thoma Bravo and Apollo didn’t return calls and messages for comment.

“Elon Musk has the cash to do it himself. He has never needed private equity,” said Andrew Boone, an analyst at JMP Securities, a Citizens company.

Buyout shops were interested in Twitter because of Musk’s success with other companies such as Tesla and SpaceX. Tesla’s stock has soared to just over $1,000 a share since it went public in 2010 at $17 a share. Tesla didn’t return messages for comment.

SpaceX has raised $7.8 billion in funding, Crunchbase said. It is said to be valued at $100 billion. Musk’s the Boring Company last week collected $675 million in fundingvaluing the tunnel company at $5.675 billion.

But just because they were interested in Twitter doesn’t mean private equity would invest in it, industry sources said. Twitter was unprofitable in 2021, reporting $221 million in losses mainly tied to the settlement of a shareholder lawsuit. For the quarter ended Dec. 31, Twitter produced $181.7 million in income, or 21 cents a diluted share. That rose to 33 cents a share on an adjusted basis.

Reed Phillips, CEO of Oaklins DeSilva+Phillips, a media investment bank, also doesn’t think anyone will pay the premium Musk is offering for Twitter. Musk’s $54.20-a-share bid represents a 38% premium to Twitter’s closing stock price of $39.31 on April 1, which was the day before Musk revealed his near-9% stake in the social media company.

“Musk believes Twitter has been poorly managed and has convinced investors [of this], partly by putting his own money where his mouth is, that he can quickly make it profitable. Based on his track record, that is probably a good bet,” Phillips said.

Twitter is scheduled to report first-quarter results on Thursday. It expects total revenue of between $1.17 billion and $1.27 billion and GAAP operating losses of between $175 million to $225 million, according to a Feb. 10 statement.

Goldman Sachs,

JP Morgan,
and Allen & Co served as financial advisors to Twitter, while Wilson Sonsini Goodrich & Rosati and Simpson Thacher & Bartlett acted as their attorneys. Morgan Stanley,
BofA Securities, and Barclays provided financial advice to Musk, while Skadden, Arps, Slate, Meagher & Flom supplied legal advice.

Write to Luisa Beltran at [email protected]


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