On April 14, Elon Musk launched the latest offensive in his Twitter barrage: a hostile takeover bid, at $54.20 per share, or nearly $43.4 billion for all shares. The South African billionaire is proud to offer a 38% premium compared to the share price at the beginning of April, when he was became the first shareholder acquiring 9.2% of the shares. And he warned: this offer that he considers generous is not negotiable. Unless it’s just a tactic…
Now, the ball is in the court of the other shareholders of the social network, free to accept or reject this offer. For its part, the Twitter address stated that its the board was goingcarefully review the offer to determine the course of action you believe is in the best interest of the company and all of Twitter’s shareholders“. But according to Informationwould lean toward an unfavorable opinion.
Beyond the financial aspect, Elon Musk did not give details of his bid project, except that he wanted to take the company out of the stock market. Inside your statement to the SEC (the American financial policeman), is content to write that the social network with more than 330 million monthly users has “extraordinary potential“, that says”to unlock“.
“Supply is too low”
As soon as the offer was put on the table, the first shareholders publicly announced their refusal to attend, starting with Saudi prince and investor Al-Walid bin Talal. “I don’t think Elon Musk’s proposal ($54.20) comes close to the intrinsic value of Twitter, given its growth prospects. I am one of the largest and oldest shareholders of Twitter. Kingdom Holding Company (his mutual fund, editor’s note) and I reject this offer,” wrote on his Twitter account. the saudi was joined your chat by investor Ross Gerber, who owns more than 9,000 shares through his fund. “The offer is too low. Elon needs to bid $69 a share to win Twitter“.
Despite these denials from the start, several experts believe that Elon Musk will ultimately succeed. In a note seen by AFP, analysts at Wedbush Securities forecast that the “The soap opera of twists and turns will end with the acquisition of Twitter by Musk“.
Asked by La Tribune, Jean-Christophe Liaubet, a financial analyst and partner at Fabernovel, believes that the offer is “correct“.”With this offer, IThe level of pressure on shareholders is quite high. The spike above $70 a share was a long time ago [14 mois, ndlr], and we must remember that in February the stock market was at 34 dollars“. The technology specialist also points out that the social network’s stock situation is quite advantageous compared to its economic performance.”Twitter is already valued today at more than 7 times its 2021 turnover. For Pinterest or Meta, this coefficient is only 4“.
Twitter, a separate value
To understand this debate about the fair price of Twitter, we must take into account the specifics of the company. “Twitter has always had a complicated history in the stock market. It is a unique company, apart, even among social networks, which has never made a profit“, reminds La Tribune Jacques-Aurélien Marcireau, co-head of equity management at Edmond de Rothschild Asset Management.
“In terms of growth in the number of users, Twitter remains far behind Facebook and even Snapchat. In addition, its profitability has yet to be demonstrated and the evolution of its government has been complicated. In short, being an investor in Twitter is a via crucis. But it is a unique asset, known to all.“
Due to the special place that the social network occupies in society, the analyst considers that the bonus offered by Musk has “nothing pharaonic“And he thinks it won’t be enough to convince investors.”In addition, we note that when the offer was made public the stock was down [en repli de -1,68% à la clôture de Wall Street, ndlr]. This means that people do not believe in the offer, or at least do not believe that all shareholders will give in.“, he argument.
A “white knight” in the second curtain?
Regardless of the outcome of the takeover bid, Twitter’s current board will be weakened. The billionaire declared that his offer was final, and that he would review his place as a shareholder in the company if his maneuver failed. “Elon Musk is therefore threatening to sell his 9.2% stake, which would cause the stock to plunge.“, says Jacques-Aurélien Marcireau.
At this point, another buyer could assume the role of “white knight” and propose a more attractive counteroffer. “But there aren’t many logical buyers: You need a big tech player, imposing but not big enough to trigger antitrust laws.“, points out the analyst. In other words, taking over Twitter is unthinkable for the Gafam (Google, Apple, Facebook, Amazon, Microsoft) but can be considered by second-tier players, as the champion of customer management software. Salesforce, which I already had tried his luck in 2019. But it is still necessary for this white knight to find an economic interest there, now debatable.
For billionaire investor Mark Cuban, this outcome would be inevitable sooner or later. “Without a dominant shareholder on the board and without major activist shareholders, if the company doesn’t grow quickly, Twitter’s days as an independent company are likely to be numbered.“, diagnose on Bloomberg.
The regulator, guest of the continuation of the soap opera Twitter / Musk?
Another player could invite himself to this soap opera: the Securities and Exchange Commission (SEC), the American financial policeman. Earlier this week, Twitter shareholders took it already entered against Musk for not fulfilling his obligations when he entered the capital. But the authority has enough to open an important file against Elon Musk.
“On the stock market, when you exceed the threshold of 5% of the shares, you are obliged to declare your intentions. Either we present ourselves as a passive shareholder, who will be content to vote and receive the dividends, or as an active shareholder, called to sit down, or even to carry out a hostile takeover bid.“, develops Jacques-Aurélien Marcireau.
Before exclaiming:northIt only took Elon Musk a long time to come before the regulator, but when he finally did, he came across as a passive investor! Shows complete disregard for the regulator. The SEC cannot sit idly by or it will set a dangerous precedent“.
In other words, the Elon Musk vs Twitter soap opera is likely to keep us guessing for a while yet…