Phew! It was quick!

A little over 11 days after Elon Musk proposed paying $54 a share for Twitter, the company’s board approved the transaction on Monday, a surprise reversal. Twitter initially seemed opposed to the idea—it adopted a poison pill, a defense against an unsolicited bid like Musk’s—but warmed up to it last weekend after Musk detailed how he could pay for it. Answer: A lot of debt (about $25 billion), some equity (roughly $21 billion), all of it wrapped in Musk’s Tesla shares. He has a lot of them, worth around $230 billion. The price of the stock on Twitter is $44 billion, which represents a 38% increase over what it traded at Musk’s first disclosure.

So that’s it—Elon won? We can expect to see an employee-parking spaceship soon. Truthfully, we’re a few orbits around the Sun from that, but Musk is definitely on course to getting what he says he wants.

What Are Musk’s Next Steps?

The agreement between Twitter’s board and Musk doesn’t seem to include a “go-shop period.” Some buyout deals have these provisions, a time in which the board welcomes any competing bids. (It’s like when the auctioneer with the honeyed voice starts with, “Going once, going . . . ”) Go-shops vary in length, their terms dictated by what buyer and seller agree to. It takes about one month to six weeks. The board will do its best to obtain the most price for the go-shop. Investors see it as a win. But go-shops aren’t required by law in Delaware, where Twitter is incorporated, so it’s not totally strange for Twitter not to do one. On Wall Street, skipping is a source of suspicion.

will add to the feeling on Wall Street that even with JPMorgan’s and Goldman Sachs’ help, Twitter found little interest when it shopped itself around over the last few weeks, trying to avoid Musk.)

Musk will make his next $54.20 tender offering to boost Twitter’s shareholding to at minimum 50%. He makes a tender offer to shareholders asking them to sell their shares. He owns 9.2%, some 73.5 million shares. He needs 319.5 million more shares to get above 50%. This will run him $17.2 billion. Easy-peasy. There are $46 billion of financing available to him.

Musk was reportedly on the phone last weekend with large shareholders to win their trust, while the board deliberated. From there, it doesn’t require any rocket science: Musk or some member(s) of Team Musk have undoubtedly added up the yeses from last weekend and knows Musk can cross over to majority control. The unlikely possibility of a shareholder revolt that stops Musk from reaching 50% is possible. It is unlikely again. It has been approved by the board, with many analysts following Twitter giving their thumbs up.

The tender offer will be open for 20 working …read more

Source:: Social Media Explorer

Author: Aaron