Short-seller Hindenburg Research warned on Monday that Elon Musk’s $44 billion ($3,39,870 crore) offer to take Twitter private could cost him dearly if the world’s richest man walks away from the deal.
“Musk holds all the cards here,” Hindenburg, who has a short position on Twitter, said in a report. “If Elon Musk’s bid for Twitter disappears tomorrow, Twitter’s equity will fall 50 percent from current levels. As a result, we see a significant risk that the deal falls short.”
Shares of the social media platform fell up to 4 per cent to touch $47.76 (approximately Rs 3,690) amid a broad market slump, their lowest since Musk offered his $54.20 (approximately Rs 4,190) per share in April. level, call it. “Best and Last”.
Twitter declined to comment.
“Interesting. Don’t forget to look at the bright side of life sometimes!” Musk tweeted a mild response, to which the short-seller said he hopes Tesla shareholders will thank him if the deal is done at a “more reasonable price.”
Hindenburg said the deal, which has undergone several developments, from financing to board approval, could weaken Twitter’s position.
“We support Musk’s efforts to keep Twitter private and see a significant chance that the deal will close at a lower price,” Hindenburg said.
The short-seller said the Tesla CEO could pay breakup charges of $1 billion (about Rs 7,725 crore) and take an unbelievable advantage to renegotiate if he so desired.
Last month, Twitter secured a $44 billion (3,39,870 crore) cash deal to sell itself to Musk, which won $7 billion (about Rs 54,080 crore) in funding from high-profile investors, including Oracle co-founder Larry Ellison. Received more than Rs. and Sequoia Capital.
CFRA Research analyst Angelo Zino said it was highly likely that the deal would close at the stated price, except that Musk had a change of heart.
© Thomson Reuters 2022