You don’t have to look hard for the reason for ElonMusk’s decision to put his $64 billion bid for Twitter “temporarily on hold.” A check on two share prices would do the trick. | OPINION
When Musk’s interest in Twitter was first revealed its share price rocketed from just under $US40 to $US50 before peaking at $US52 a share on the day the agreed offer was announced. They are now trading back around $US40 a share.
The original offer was going to be funded by $US27.5 billion of equity and $US16.5 billion of debt, with Musk arranging what is effectively a margin loan secured by a tranche of his Tesla shares that, at the time, covered the loan six times over, for about $US12.5 billion of the equity component.
Nevertheless, Musk does seem to be attempting to lay the ground to either abandon the bid or renegotiate its terms and lower the price., he has cited a recent Twitter filing that said fake accounts on its social media platform account for less than five per cent of its users for putting the bid on hold while his bid team tests the Twitter claim.
That makes Musk’s pausing of the deal look like a pretext to renegotiate the offer price or try to walk away. The bid for Twitter made little financial sense when it was first unveiled – it looked like a vanity purchase rather than a rational play – but it looks far worse in the current uncertain sharemarket environment and with the currency that underpins Musk’s own position, Tesla shares, so heavily devalued.
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