On April 14, Elon Musk launched the latest offensive in his Twitter blitz: a hostile takeover bid at $54.20 per share, or nearly $43.4 billion for the company’s entire stock. The South African billionaire is proud to offer a 38% premium over the share price in early April when it became the largest shareholder by acquiring 9.2% of the shares. And he warned: This offer, which he considers generous, is non-negotiable. Unless it’s just a tactic…
The ball is now in the hands of the other shareholders of the social network, who are free to accept or reject this offer. For its part, Twitter’s management stated that it was its board went”carefully review the offer to determine what course of action it believes is in the best interests of the company and all Twitter shareholders“But according to The Information, it would lean towards an unfavorable opinion.
Beyond the financial aspect, Elon Musk did not give any details about his takeover plan, except that he wanted to take the company private. In his statement to the SEC (the American financial police officer), he is content to write that the social network with more than 330 million monthly users “extraordinary potential“that it counts”Unlock“.
“The offer is way too low”
As soon as the offer was on the table, the first shareholders first publicly announced their rejection Saudi prince and investor Al-Walid bin Talal. “I don’t think Elon Musk’s offer ($54.20) comes close to matching Twitter’s intrinsic value given its growth prospects. I’m one of Twitter’s largest and oldest shareholders. Kingdom Holding Company (their mutual fund, ed.) and I decline this offer,” he wrote on his Twitter account. The Saudi was joined his lecture by investor Ross Gerber, who owns more than 9,000 shares through his fund. “The offer is way too low. Elon must place a bid of $69 per share for Twitter to win“.
Despite these denials from the start, several experts believe that Elon Musk will ultimately succeed. In a note from AFP, analysts at Wedbush Securities predict that the “Soap opera twists and turns will end with Mr. Musk’s takeover of Twitter“.
Asked by La Tribune, Jean-Christophe Liaubet, financial analyst and partner at Fabernovel, believes that the offer “Correctly“.”With this offer IThe pressure on the shareholders is quite high. It’s been a long time since the surge above $70 a share [14 mois, ndlr], and you have to remember that the stock was at $34 in February“The tech specialist also points out that the stock market situation of the social network is rather favorable compared to its economic performance.”Already today, Twitter is valued at more than 7 times its 2021 revenue, while on Pinterest or Meta this coefficient is only 4“.
Twitter, a value in itself
To understand this debate about the right price of Twitter, we need to consider the ins and outs of the company. “Twitter has always had a complicated history in the stock market. It’s a unique company, even among social networks, that has never turned a profit” recalls La Tribune Jacques-Aurélien Marcireau, co-director of equity management at Edmond de Rothschild Asset Management.
Due to the special position of the social network in society, the analyst believes that the bonus offered by Musk “nothing pharaonic“and believes that convincing investors will not be enough.”In addition, we note that the stock was in the red at the time the offer was published [en repli de -1,68% à la clôture de Wall Street, ndlr]. That means people don’t believe in the offer, or at least don’t believe that all shareholders will give in“, he is arguing.
A “white knight” in the second curtain?
Regardless of the outcome of the takeover bid, the current Twitter board will be weakened. The billionaire stated that his offer is final and he will reconsider his place as a shareholder of the company if his maneuver fails. “As a result, Elon Musk is threatening to sell his 9.2% stake, which would crash the stock‘ emphasizes Jacques-Aurélien Marcireau.
At that point, another buyer could take on the role of the “white knight” and come up with a more attractive counter-offer. “But there aren’t many logical buyers: You need a big tech player that’s imposing but not big enough to trigger antitrust law‘ the analyst notes. In other words, the acquisition of Twitter is unthinkable for Gafam (Google, Apple, Facebook, Amazon, Microsoft), but it can be considered a customer management software champion by second-line players. Salesforce, who had already tried their luck in 2019. But this white knight has yet to find an economic interest in what is now in question.
For billionaire investor Mark Cuban, that outcome would be inevitable sooner or later anyway. “Without a dominant shareholder on its board and without major shareholder activists, Twitter’s days as an independent company are likely to be numbered unless the company grows quickly.‘ he diagnoses in Bloomberg.
The Regulator, guest of the Twitter/Musk soap opera sequel?
Another actor could invite himself into this soap opera: the Securities and Exchange Commission (SEC), the American financial policeman. Earlier this week, Twitter shareholders sued Musk for failing to meet its obligations when entering the capital. But the agency has enough to open an important file against Elon Musk.
“On the stock exchange, if you exceed the 5% threshold of shares, you are forced to declare your intentions. Either we present ourselves as a passive shareholder, content to vote and receive the dividends, or an active shareholder, seated or even going through with a hostile takeover bid“, develops Jacques-Aurélien Marcireau.
Before the exclamation:notIt took Elon Musk a long time to report to regulators, but when he finally did, he presented himself as a passive investor! It shows total disregard for regulators. The SEC cannot stand by or it will set a dangerous precedent“.
In other words, the Elon Musk vs Twitter soap opera will likely keep us in suspense for a while yet…