Elon Musk’s Twitter takeover offer leaves Wall Street skeptical
Twitter’s board of directors is mulling Elon Musk’s $43 billion offer to buy the social media platform – but several analysts say company management is likely to reject the surprise bid.
The board said it would “carefully review the proposal to determine the course of action” and met beginning at 10 a.m. ET to discuss the matter, according to CNBC.
The company is also expected to discuss the situation with employees – some of whom are said to be worried about Musk’s potential involvement – during an all-hands meeting later this afternoon.
Musk noted his $54.20 per share, all-cash offer marked a 54% premium over Twitter’s stock value before he began amassing a 9% stake, but analysts at Jefferies expect a “no” vote on the deal – arguing the offer is simply too low to entice the board.
“While we viewed Musk’s involvement as a positive for the stock, we believe Twitter is likely looking for an offer of $60+,” the Jeffries analysts said in a note to investors.
They added that Twitter already has “strong technology leadership” from board director Bret Taylor, Facebook’s former chief technology officer.
Musk has already indicated that he has no intention of sweetening his offer – telling Twitter’s board that it was his “best and final” bid and that he “would need to reconsider my position as a shareholder” if it is rejected. At present, Musk is the company’s largest individual stockholder.
Investors initially reacted positively to Musk’s potential acquisition, but Twitter shares were trading slightly lower as of midday Thursday.
A refusal of Musk’s offer could tee up an even more contentious battle over Twitter’s future in the days ahead, according to Investing.com senior analyst Jesse Cohen.
“Given the likelihood that Twitter’s board will reject the offer, the question then becomes whether Musk would want to perform a hostile takeover of the company,” Cohen told Reuters.
While Musk’s offer represented a premium over Twitter’s recent stock price, several analysts noted the company’s shares were trading above $70 within the last year.
And so far, Musk and existing Twitter management have indicated they have differing views over how the company should operate in the future.
Future Fund managing partner Gary Black gave “high odds” that Twitter’s board would shoot down the offer. “Elon can add to his TWTR position as long as he discloses. Likely outcome: Other media firms likely to submit bids with TWTR now in play,” Black added.
While many market analysts were skeptical of the offer, others have argued Musk’s deal is too good of an opportunity for Twitter to pass up.
Wedbush analyst Daniel Ives is among those who expect the board to accept the bid – expressing his view that a deal “likely happens.”
“It would be hard for any other bidders/consortium to emerge and the Twitter board will be forced likely to accept this bid and/or run an active process to sell Twitter,” Ives said.
“There will be host of questions around financing, regulatory, balancing Musk’s time (Tesla, SpaceX) in the coming days but ultimately based on this filing it is a now or never bid for Twitter to accept.”
With Post wires