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Twitter and Elon Musk in Advanced Talks Over a Sale That Could Be Finalized As Soon As This Week - Report

Stock Markets Apr 25, 2022 06:19AM ET
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© Reuters. Twitter (TWTR) and Elon Musk in Advanced Talks Over a Sale That Could Be Finalized As Soon As This Week - Report

Twitter (NYSE:TWTR) is holding talks to potentially selling itself to Elon Musk in a deal that could be announced this week, less than two weeks after Tesla (NASDAQ:TSLA) CEO put forward his $43 billion bid to buy the social media platform, according to the Wall Street Journal.

Twitter and Musk reportedly met on Sunday to negotiate and quickly made progress, however, there is still no guarantee that the deal will be finalized, the report added.

It was expected that the social media company will reject Musk’s bid after it adopted a “poison pill” to prevent him from raising his stake further. However, after Musk recently said that he has $46.5 billion in financing Twitter made a u-turn and agreed to negotiate a potential deal.

The billionaire made it clear to Twitter Chairman Bret Taylor that he will not change his bid anymore, saying that his $54.20-a-share offer is “best and final.” While the talks have made certain progress, Twitter and Musk still have some issues to discuss such as what would Musk pay in case the deal falls apart before being completed.

Twitter is set to report its Q1 financial report on Thursday and is expected to have its say on the offer then.

Twitter’s unexpected decision to open its door to negotiations comes after Musk privately met with several shareholders of the social media company to talk about his offer, repeatedly saying that the board has to make a “yes-or-no” decision, according to the WSJ.

Lauri Brunner, a Portfolio Manager at Thrivent Asset Management that holds a roughly 0.4% stake in Twitter, believes Musk is a proficient operator with an “established track record at Tesla,” she said.

“He is the catalyst to deliver strong operating performance at Twitter,” Brunner said.

New Street Research analyst Blair Levin is skeptical that big tech companies will rival Musk in his attempts to take Twitter private.

Levin says that both Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:FB) would “very likely” face a complaint from the DoJ and FTC in case they bid for Twitter. Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) are in a similar position, while Apple's (NASDAQ:AAPL) involvement would likely make the most sense from the regulatory viewpoint.

“Apple does not control data or utilize advertising in the same way as the others and therefore would probably be allowed to purchase Twitter. But we are highly confident Apple would regard the likely headaches to follow as a consumer brand version of a poison pill,” Levin said in a client note.

Wedbush analyst Daniel Ives says that Twitter was forced to return to the bargaining table after being left “empty handed from private equity circles staring at a hostile tender offer process.”

“The Street will read this news today as the beginning of the end for Twitter as a public company with Musk likely now on a path to acquire the company unless a second bidder comes into the mix,” Ives added.

On implications for Tesla, Ives does not believe that the Twitter offer “will result in a major sale of Musk's Tesla shares, instead being used as pledged shares for the loans obtained by Musk.”

Twitter stock price is up 0.5% in pre-open Monday.

By Senad Karaahmetovic

Twitter and Elon Musk in Advanced Talks Over a Sale That Could Be Finalized As Soon As This Week - Report
 

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