October 5, 2022 3:56:33
It’s confirmed. The Tesla founder plans to proceed with the proposed acquisition of Twitter.
Once trading resumed, Twitter shares jumped nearly 22% at market close on Tuesday – having twice been halted earlier in the day.
Musk has made very public his intentions to back out, even claiming that a settlement with whistleblower Peiter Zatko breached key terms. This followed the initial, primary claim of his that Twitter had been grossly deceptive in providing information about the number of bots (fake accounts) on the platform.
This confirmation comes after Wedbush Securities’ outlook that Musk nonetheless would very likely lose any ensuing legal battle, and be forced to press ahead with the deal.
According to an official company statement from the social media giant “Twitter has breached none of its representations or obligations under the agreement”.
Wedbush analysts see “minimal regulatory risk in this deal”. Though Musk’s ownership of Twitter “will cause a firestorm of worries and questions” among the general public, media figures and the US government.
Activist investor Carl Icahn is said to have invested over $500 million in Twitter shares – an investment which may have just paid off, handsomely, with this 22% surge.
Icahn is believed to have originally made the investment on the basis that Elon Musk’s legal contest wouldn’t get off the ground. But even if it did, he would very likely lose. Icahn saw TWTR’s intrinsic value in the mid 30s – well below Musk’s finalised offer of $54.20.
Having paid an average price in the mid $30s, the profit for Icahn Enterprise is set to total over $250 million, according to sources at Wall Street Journal.
Musk and Twitter themselves later provided public confirmation that the deal will proceed. Though key conditions include Twitter staying its main legal proceedings, and upon Musk receiving financing for the takeover.
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