Elon Musk’s $44bn Twitter deal could get repriced lower

If Elon Musk’s bid for Twitter disappeared tomorrow, Twitter’s equity would fall by 50% from current levels, says Hindenburg Research

Short-seller Hindenburg Research warned on Monday that Elon Musk’s $44-billion deal to take Twitter Inc private could get repriced lower if the Silicon Valley billionaire walked away from the deal.

Musk holds all the cards here, Hindenburg, which has a short position on Twitter, said in a report. 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.

Shares of the social media platform were down as much as 4% amid a broader market decline and touched $47.76, their lowest level since Musk made his $54.20 per share offer in April, calling it ‘best and final’.

Interesting. Don’t forget to look on the bright side of life sometimes! Musk tweeted in a light-hearted response, to which the short-seller said it expects Tesla shareholders will thank him if the deal is done at a ‘more reasonable price’.

Hindenburg said the deal has seen a number of developments, from financing to board approval, 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.

Hindenburg said Musk could walk away paying the $1 billion breakup fee and has leverage to renegotiate if he chooses to.

Last month, Twitter secured a $44 billion cash deal to sell itself to Tesla Inc chief executive and received over $7 billion in funding from high-profile investors, including Oracle’s co-founder Larry Ellison and Sequoia Capital.

Angelo Zino, analyst at CFRA Research, said there is a high probability that the deal would close at the stated offer price, except if Musk has a change of heart.