Elon Musk has launched a $43 billion hostile takeover bid for Twitter. He has priced twitter at $54.20 per share. This represents a significant takeover premium over Twitter's recent share price (of around $46 per share) and the share price before Elon Musk started buying shares in Twitter or publicly announced his share purchases.
This raises several questions including: Why is Elon Musk bidding for Twitter? Is the takeover offer good for Twitter Shareholders (i.e., should they accept the takeover bid)? What would happen if the takeover fails and Elon Musk leaves Twitter?
I note that the sheer magnitude of the takeover premium, coupled with the impact that Elon Musk selling his shares would have, makes it attractive to accept the bid. However, each shareholder should make their own decision about whether they believe receiving $54.20 now is better than what they believe Twitter's management team can deliver. If Elon Musk withdraws the bid (or the bid fails) and he sells his shares, it is quite likely that the share price would revert to what it was before Elon Musk became involved, especially as there are relatively few alternative bidders.
There are some hurdles to the deal completing. The biggest hurdle is regulatory. Regulators have scrutinized most tech takeovers recently, and have been especially attuned to free speech issues. However, an advantage here is that Elon Musk does not have other tech / social media platforms, reducing any anti-competitive impact from his bid.
Time stamps
* 0:00 Introduction & Overview
* 2:27 The takeover offer
* 7:20 Why is Elon Musk bidding for Twitter?
* 9:33 Is the takeover good for Twitter shareholders?
* 12:57 Societal impact
* 15:08 Headwinds and regulatory issues
* 17:43 What happens if the bid fails?
* 20:44 Concluding thoughts
#Twitter #TWTR #ElonMusk
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