Musk-Twitter deal could be valued lower if Musk walks away, says Hindenburg Research

Short seller Hindenburg Research warned Monday that Elon Musk’s $44 billion ($3.39.870 million) offer to take Twitter private could see a lower price if the world’s richest person exits the business.

“Musk has all the cards in his hands here,” Hindenburg, who is short on Twitter, said in a report. “If Elon Musk’s bid for Twitter disappeared tomorrow, Twitter’s equity would drop 50 percent from current levels. Consequently, we see a significant risk that the deal will be valued lower.”

Shares of the social media platform fell as much as 4 percent amid a broader market decline, hitting $47.76 (about Rs.3,690), the lowest since Musk’s bid of $54.20 (about Rs.4,190) per share in March April had submitted “best and last”.

Twitter declined to comment.

“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 he expects Tesla shareholders to thank him if the deal closes at a “more reasonable price.”

Hindenburg said the deal faced a number of developments, from funding to board approval, that could have weakened Twitter’s position.

“We support Musk’s efforts to take Twitter private and see a significant opportunity for the deal to close at a lower price,” Hindenburg said.

The short seller said Tesla’s chief executive can pay the $1 billion (around Rs.7,725 billion) breakup fee and has incredible leverage to renegotiate if he chooses to.

Last month, Twitter secured a US$44 billion (Rs.3,39.87 billion) cash deal to sell itself to Musk, who has over US$7 billion (around Rs.54,080 million) in funding from high profile investors including Oracle co-founder Larry Ellison and Sequoia Capital.

Angelo Zino, an analyst at CFRA Research, said there was a high probability that the deal would close at the quoted asking price unless Musk had a change of heart.

© Thomson Reuters 2022 Musk-Twitter deal could be valued lower if Musk walks away, says Hindenburg Research

Ryan Sederquist

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