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Behind the Scenes of Twitter Acquisition

An analysis by Interconnected Business Services, LLC.

UPDATE September 12, 2022 Due to the legal challenges presented to affect this deal, we will discontinue to analyze it.

Author View:

The world is watching the process of acquiring Twitter by Elon Musk, but I decided to take a deeper look in the process to be covered in separate articles and analyze the data as details become available and study the impact of the acquisition on the market.

It is a given that the market value fluctuates following each move, we have been noticing a loss in both Twitter and Tesla share values which may or may not recover after the deal is done/cancelled. Although the loss in the net worth of Elon Musk which is approximately $49 Billion of his net worth may not be recovered as he had to sell a big size of his shares in Tesla to secure funding for the acquisition.

However, it is worth pointing out that before Elon Musk announced his intention to fully purchase Twitter, he had bought 9.2% of outstanding shares without reporting it, by delaying the disclosure of the stocks purchase he had profited at least $156 Million One Hundred Fifty-Six Million Dollars.

It was interesting to see Twitter agree to the purchase, after they announced the poison pill strategy to prevent the hostile takeover.

In its proxy statement Twitter stated the following:

“Musk negotiated the Twitter deal over the weekend of April 23 and April 24 without carrying out any due diligence, the proxy statement shows.

Mr. Musk did not ask to enter into a confidentiality agreement or seek from Twitter any non-public info regarding Twitter.”

End of the proxy statement quote.

As of May 31st 2022, Twitter market value based on the shares outstanding is $30,254,400,000 Thirty billion & Two-hundred fifty-four million and four hundred thousand dollars.  Should the deal have closed at that day the remaining capital will be $13,745,600,000 Thirteen billion & seven- hundred forty-five million and six hundred thousand dollars.

The fact that the richest man ever, decided to rush into the deal as reported previously and gave a fixed price for a fluctuating market is puzzling, we are monitoring a few raised flags in other dimensions that will be discussed in another report It is a given that Elon Musk lost a big part of his net worth along with his Tesla shares he sold,

So, could it be settling scores, or is it an unclear way that serves Elon Musk business, or is it a matter of political interests?

We will be issuing more analytical reports regarding this matter.

Below is the timeline of the acquiring process, and shares prices for both Twitter and Tesla.

All data in this report has occurred by the end of May 31, 2022
Resources were used to write this article including but not limited to: Bloomberg, Fortune, Forbes, Business Insiders and others.

Interconnected Business Services, LLC, is a management and financial consulting business, specialized in analysis, business and financial management.

Acquisition Timeline:

January 31, 2022  Musk began buying Twitter’s stocks.

April 4, 2022 Musk announced acquiring 9.2% of Twitter’s stock for $2.64 Billion. This made him the company’s largest shareholder. Twitter stock price raised 27%

April 5, 2022 Twitter offered Musk to join the Board of Directors, in which he accepted then declined.

April 14, 2022 Musk offered to purchase Twitter at $43 Billion or $54.2 per share. Twitter considered this as Hostile Takeover Attempt.

April 15, 2022 Twitter announced Poison Pill strategy that will allow shareholders to purchase additional stock in the event of hostile takeover should occur. The plan will expire on April 14th 2023.

April 20, 2022 Musk disclosed that he had secured financing provided by a group of banks led by:

  • Morgan Stanley.
  • Bank of America.
  • Barclays.
  • MUFG.
  • Société Générale.
  • Mizuho Bank.
  • BNP Paribas.

For a potential tender offer to acquire the company. The funding included:

  • $7 Billion of senior secured bank loans.
  • $6 Billion in subordinated debt.
  • $6.25 Billion in bank loans to Musk personally secured by $62.5 Billion of his Tesla Stock.
  • $20 Billion in cash equity from Musk to be provided by sales of Tesla stock and other assets.
  • $7.1 Billion in equity from 19 independent investors.
  • The banks only participated in the $12.5 Billion margin loan to Musk.
  • The debt is estimated to cost Twitter approximately $1 billion in annual interest and fees.
  • Tesla shares fell 12% on the day acquisition was announced.
  • Musk incurred $21 Billion paper loss that day.

Within three days after Twitter agreed to be acquired, Musk had sold $8.5 Billion of his Tesla shares.

April 25, 2022 Twitter shares rose by 5% following reports that Twitter was poised to accept Musk’s offer. Twitter’s board publicly and unanimously accepted the buyout offer, for $44 Billion and Twitter will become a private company once the transaction is completed sometime in 2022.

May 04, 2022 Musk was summoned by the digital, culture, media and sport committee to discuss the effect of his buyout on free speech and online harms.

 

 

Stock Prices
DayDateTwitterTeslaNotes
MondayApril 4, 2022$49.97$1145.45
TuesdayApril 5, 2022$50.98$1091.26
WednesdayApril 6, 2022$50.77$1045.76
ThursdayApril 7, 2022$48.03$1057.26
FridayApril 8, 2022$46.23$1025.49
MondayApril 11, 2022$47.01$975.93
TuesdayApril 12, 2022$44.48$986.95
WednesdayApril 13, 2022$45.85$1022.37
ThursdayApril 14, 2022$45.08$985.00
MondayApril 18, 2022$48.45$1004.29
TuesdayApril 19, 2022$46.16$1028.15
WednesdayApril 20, 2022$46.72$977.20
ThursdayApril 21, 2022$47.08$1008.78
FridayApril 22, 2022$48.93$1005.05
MondayApril 25, 2022$51.70$998.02
TuesdayApril 26, 2022$49.68$876.42
WednesdayApril 27, 2022$48.64$881.51
ThursdayApril 28, 2022$49.11$877.51
FridayApril 29, 2022$49.02$870.76
MondayMay 02, 2022$49.14$902.54
TuesdayMay 03, 2022$48.87$909.25
WednesdayMay 04, 2022$49.06$952.62
ThursdayMay 05, 2022$50.36$873.28
FridayMay 06, 2022$49.80$856.56
MondayMay 09, 2022$47.96$787.11
TuesdayMay 10, 2022$47.26$800.04
WednesdayMay 11, 2022$46.09$734.00
ThursdayMay 12, 2022$45.08$728.00
FridayMay 13, 2022$40.72$769.59Musk announced the deal on hold
MondayMay 16, 2022$37.39$724.37
TuesdayMay 17, 2022$38.32$761.61
WednesdayMay 18, 2022$36.85$709.81
ThursdayMay 19, 2022$37.29$709.42
FridayMay 20, 2022$38.29$663.90
MondayMay 23, 2022$37.86$674.90
TuesdayMay 24, 2022$35.76$628.16
WednesdayMay 25, 2022$37.16$658.80
ThursdayMay 26, 2022$39.52$707.73
FridayMay 27, 2022$40.17$759.63
TuesdayMay 31, 2022$39.60$758.26

 

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