Elon Musk U-Turns Again, Offers to Buy Twitter

  • TSLA.us
    (${instrument.percentChange}%)
  • TWTR.us
    (${instrument.percentChange}%)

The Musk-Twitter Saga

The story had started back in early-April, when a filing with the Securities & Exchange Commission (SEC) had revealed that Mr Musk had taken an approximately 9% stake in Twitter [1]. What followed was – in typical Musk fashion – a series of developments, a litany of comments and media buzz around Twitter and whether he intends to buy the company.

He then moved forward with a bid to acquire the social networking platform and the two sides finally came to an agreement on April 25. Under the deal, an entity wholly owned by Elon Musk would acquire Twitter for $54.20/share and take it private. [2]

Things quickly went south though, as a public dispute erupted over Twitter's claims for the number of spam/fake accounts on the platform, with Tesla's CEO threatening to pull out. He eventually announced the in early-July, accusing the firm of multiple breaches of its provisions. [3]

Twitter quickly responded with a lawsuit to enforce the deal, in the Court of Chancery of the State of Delaware [4], with the trial expected to begin in mid-October.

Elon Musk to Complete the Deal

This Tuesday marked another episode to the acquisition saga, as Mr Musk reversed course again, ahead of the actual trial. Based on a regulatory filing, he now intends to proceed with the completion of the acquisition agreement at the price original price of the April deal. [5]

It is uncertain what caused this reversal, but it seems like he would have a hard time wining the lawsuit and he would likely prefer to avoid a court trial and the depositions ahead of it.

Twitter confirmed that he received the relevant letter from the Musk parties and stated its intention to close the transaction at the original agreed upon price. [6]

It needs to be noted that months of heated and public dispute between the two parties has probably created some distrust and potentially animosity, which could still make the actual completion a bit tricky. It also remains to be seen how fast this can happen, given that shareholders have already approved the deal.

Market Reaction

Trading on the shares of Twitter was halted two times yesterday [7], on reports of Mr Musk's offer to complete the merger agreement. TWTR.us closed Tuesday with gains in excess of 20%, slightly below the $54.20 price of the buyout deal.

Meanwhile, shares of Tesla traded higher and paused the three-day decline, in an overall good day for the US stock market. The acquisition saga and Mr Musk erratic behavior has not reflected well on Tesla Motors Inc, also having probably caused the recent sell of company shares.

The prolific CEO also dropped some hints around his "everything app" dubbed X, saying that the Twitter buyout "probably accelerates X by 3 to 5 years" [8].

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 05 Oct 2022 https://www.sec.gov/Archives/edgar/data/1494730/000110465922041911/tm2211482d1_sc13g.htm

2

Retrieved 05 Oct 2022 https://www.prnewswire.com/news-releases/elon-musk-to-acquire-twitter-301532245.html

3

Retrieved 05 Oct 2022 https://www.sec.gov/Archives/edgar/data/1418091/000110465922078413/tm2220599d1_ex99-p.htm

4

Retrieved 05 Oct 2022 https://www.wlrk.com/docs/76660099_Final-Verified-Complaint.pdf

5

Retrieved 05 Oct 2022 https://d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/3311f2bf-b6e5-4a2b-b02c-65d71376883f.pdf

6

Retrieved 05 Oct 2022 https://twitter.com/TwitterIR/status/1577380758192197632

7

Retrieved 05 Oct 2022 https://www.nasdaqtrader.com/trader.aspx

8

Retrieved 30 Nov 2022 https://twitter.com/elonmusk/status/1577428673971777536

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

Risk Warning: Our service includes products that are traded on margin and carry a risk of losses in excess of your deposited funds. The products may not be suitable for all investors. Please ensure that you fully understand the risks involved.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}