Twitter may not receive a bid as good as Elon Musk’s if the billionaire and Tesla CEO decides to back down from his $44 billion deal with Twitter, investment research firm Hindenburg Research said on Monday.
The investment research firm noted that any other deal to buy Twitter could be repriced for lower if Elon Musk revokes his decision to acquire the social media company.
“Musk holds all the cards here,” the research firm which holds a short position on Twitter said in a recent report adding that “If Elon Musk’s bid for Twitter disappeared tomorrow, Twitter’s equity would fall by 50% from current levels. Consequently, we see a significant risk that the deal gets repriced lower.”
Last month was quite a rollercoaster ride with Elon Musk rejecting a seat on the Twitter board to declaring his intention to buy Twitter for $44 billion. The board debated his bid and went as far as issuing a shareholder’s rights plan called the “poison pill” before finally accepting the offer from the billionaire.
Following the report from Hindenburg, shares of the social media company were down about 4 percent and hit $47.76 – the company’s lowest since Elon Musk made his $54.20 per share offer.
Twitter is yet to issue a response to Hindenburg’s claim but Elon Musk responded to a tweet from Hindenburg. “Interesting. Don’t forget to look on the bright side of life sometimes!” he tweeted.
Interesting. Don’t forget to look on the bright side of life sometimes!
— Elon Musk (@elonmusk) May 9, 2022
Hindenburg stipulates that the deal can be done at a more “reasonable price”, and by this, it means lesser than the billionaire’s initial bid adding that Tesla shareholders will thank him for it.
In the report, Hindenburg added that the Twitter-Elon Musk deal has been through various stages such as board approval, financing, etc., which could have weakened Twitter’s position. “We are supportive of Musk’s efforts to take Twitter private and see a significant chance the deal will close at a lower price,” Hindenburg said.
Elon Musk will be required to pay Twitter a termination fee of $1 billion if he can’t secure funding for his bid. Twitter will also have to pay Elon Musk $1 billion in breakup fee if the company decides not to go through with the deal as a result of another offer, but it doesn’t look like the company has the upper hand here.