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Twitter Jumps Over 5% Amid Reports That It Will Accept Elon Musk’s Buyout Offer

Topline

Shares of Twitter added to recent gains and jumped over 3% amid reports that the social media company is in advanced talks to sell itself to Tesla billionaire Elon Musk, with a deal expected to be announced as soon as today.

Key Facts

Twitter’s stock moved higher again on Monday, rising 3.5% as investors cheered reports that the company’s board of directors have been negotiating with Musk over his buyout offer.

Twitter’s board is considering accepting Musk’s original offer of $54.20 per share in cash, which values the company at around $43 billion, and looks to be nearing a deal to sell the company, several publications have reported.

Twitter’s board reportedly met on Sunday to negotiate Musk’s offer and a formal announcement about a deal is now expected by later on Monday, the Wall Street Journal reported.

Twitter was until recently expected to decline Musk’s offer to buy the company and take it private, having adopted a so-called poison pill to fend off any hostile takeover.

But the board now appears to be more receptive to Musk’s acquisition offer, especially after the Tesla billionaire revealed in an SEC filing last week that he had secured $46.5 billion in financing.

The latest reports may be a “turning point” and “likely came from the Board’s realization that an alternative bid from a ‘white knight’ may be difficult to come by, especially following the decline in asset prices from social media companies in recent weeks/months,” says Angelo Zino, senior equity analyst at CFRA.

Surprising Fact:

Twitter’s stock is up over 30% this month, with the majority of gains coming after Musk first announced his offer to buy the social media platform earlier this month.

Crucial Quote:

“The Board’s willingness to have a constructive conversation along with financing in place improves the likelihood that a deal could come to fruition,” says Zino. “Despite Twitter’s tactic to instill a ‘poison pill,’ it appears that Elon does have the Board backed into a corner.”

Key Background:

Wall Street analysts were largely split when Musk first went public with his unsolicited offer to buy Twitter earlier this month. Some experts predicted that the “soap opera” would end with Musk acquiring the company, while others remained highly skeptical and downgraded Twitter’s stock amid the uncertainty. The vast majority of analysts maintain a “hold” rating on Twitter shares as the market waits to see what happens with Musk’s potential takeover.

Further Reading:

Twitter Poised To Accept Elon Musk’s Acquisition Offer, Reports Say (Forbes)

Elon Musk Has Secured $46.5 Billion In Financing For Twitter Bid, Considers Tender Offer (Forbes)

Twitter Board Adopts Poison Pill To Fend Off Elon Musk’s Takeover Bid (Forbes)

Distraction Or Hostile Takeover? Here’s What Analysts Say About Elon Musk’s Offer To Buy Twitter (Forbes)