A cryptic tweet with the word “tender” from billionaire entrepreneur Elon Musk left investors in the dark over the weekend, a wink-and-nod allusion to a prospective tender offer to Twitter Inc. shareholders for control of the firm, according to a report.
Following the filing of a $43 billion proposal for Twitter, in which he offered $54.20 per share, the world’s richest person caused a commotion last week. As a result, Twitter adopted a so-called poison-pill provision on Friday, making it more difficult for Musk or a group of investors to acquire additional shares.
If Musk is finally rejected by Twitter’s board of directors, the public will be able to determine whether Musk was actually threatening a direct appeal to shareholders or if he had just added the 1956 Elvis Presley single “Love Me Tender” to his playlist.
According to Bloomberg Intelligence analysts Mandeep Singh and Ashley Kim, Musk may try to form partnerships with investors such as Oracle Corp., whose chief executive officer, Larry Ellison, serves on Tesla Inc.’s board of directors, as well as a group of private equity firms such as Thoma Bravo, according to a report published Friday. According to the authors, this alliance has the potential to lift the offer to $50 billion.
Even in the absence of a poison pill provision and defensive measures from the company’s board of directors, an acquisition is far from assured. Musk said at a TED conference on April 14 that he is “unsure” whether he would be able to complete the acquisition of the firm, although he did say that he had a backup plan, though he did not elaborate.
Musk said over the weekend that the economic interests of Twitter’s board of directors are not aligned with those of the company’s owners. He was reacting to a tweet concerning the equity ownership of board members, in which he said that, after the departure of Twitter founder Jack Dorsey, the board “together holds essentially no shares of the company.”
Dorsey, who will continue to serve on the company’s board of directors until the end of the year, also took the uncommon step of criticising the company’s executives on the platform. “It’s been continuously the dysfunction of the business,” Dorsey said of the board of directors at Twitter.
Wall Street banks are taking sides in the Twitter debate, which has captured the attention of the whole world. A total of two investment banks have been employed by Twitter, including Goldman Sachs Group and JPMorgan Chase & Co., the latter of which has previously spat with Musk over the value of hundreds of millions of dollars’ worth of Tesla stock warrants.
Twitter shares have increased almost 15 percent since Musk declared a 9.2 percent investment in the firm on April 4, but they are still considerably below Musk’s bid price of $45.08 per share as of April 14, showing investor scepticism that the transaction will go through. Tesla’s stock has plummeted 9.2 percent in the same time frame, as its investors fret about the possibility that its CEO may be sidetracked by another public firm or passion project during that time period. It is also under pressure in China, where its enormous Shanghai automotive manufacturing has been closed for many weeks as a result of the Covid-19 lockdowns that have taken place around the country.
Tesla will release its first-quarter profits report later this week, after a record-breaking first three months of the year in terms of deliveries. Analysts expect sales of around $17.8 billion and adjusted profits per share of $2.27 per share in the next year.
“As the Berlin facility starts deliveries, Tesla’s next phase of development will be dependent largely on removing capacity bottlenecks in Europe,” said Bloomberg Intelligence analysts Kevin Tynan and Andreas Krohn last week. “Given the increased intensity of government regulatory and subsidy environments, the speed of adoption and subsequent competition is accelerating, increasing the need of having high-volume nameplates manufactured elsewhere.”