Winners and losers at The Mask – Deal on Twitter
In April, Elon Musk announced that he had reached an agreement to buy Twitter for $44 billion. In July, he announced the end of the deal, forcing Twitter to sue the world’s richest man. This week in April, he again vowed to buy Twitter for $54.2 a share if the social network dropped its lawsuit against him.
The fact that Musk constantly “turns the car” when he doesn’t get a chance to take on Twitter is his rare fault. More importantly, it also put him in the awkward position of having to begrudgingly spend billions of dollars on the business.
The Tesla CEO has repeatedly criticized Twitter after announcing the purchase of the social network. As a result, the company’s stock price has fallen 26% since April, and observers say Musk is overpaying for Twitter. According to Barrons, Musk is valued at $54.2 per Twitter share, twice the price of the two most powerful social networks, Meta and Snap.
Wedbush tech analyst Dan Ives even likens it to “putting premium caviar on a $2 pizza.” “This is a bad deal for billionaire America, and also for the more than a dozen investors who backed him in a $44 billion deal,” Ives told me. Reuters.
Musk’s wealth has a lot to do with Tesla’s stock price. But since the announcement of the Twitter acquisition, Tesla stock has fallen 28%, and Musk’s fortune has also “volatilized” by around $30 billion and is now worth more than $200 billion.
Twitter’s position isn’t as good as it used to be either. “We think Twitter is becoming less attractive than it was six months ago. There is no stability in social networks now, no new features due to legal issues in the past,” said two analysts. Analysis by Mark Kelly and Thomas Doheny of Stifel.
Not only Musk and Twitter were affected, but also banks like Morgan Stanley and Bank of America. “The bench is against the wall. They have no choice but to fund the deal because they have upfront commitments,” Ives said.
The lawsuit is likely to force investors like Oracle founder Larry Ellison and Morgan Stanley CEO James Gorman to testify in court. Then they may have to answer a series of questions about the newly uncovered secret text messaging exchange.
“As a result, Musk even had to expedite the settlement and seek to have the lawsuit dropped. Losses from the lawsuit could damage his relationships with his old billionaire friends,” said Gerard Filitti, senior consultant at The Lawfare Project. Statement by Gerard Filitti. people in business.
Twitter employees were also unhappy with the deal. consequences New York PostAfter the news that Musk will buy Twitter again, many employees became concerned, angry and expressed their dissatisfaction on the platform. Some even said they would quit if Musk took over the company.
“The main job of an employee in a company is to concentrate on work. But now he’s just focused on who’s going to be boss and what’s going to happen next,” said Harry Kremer, professor of management and strategy at the Kellogg School of Management. from Northwestern University.
consequences people in businessHundreds of Twitter employees have left the company since June, largely over concerns for Musk’s leadership.
victory for whom?
Twitter almost managed to “force” Musk to sit down and negotiate to get back what he promised six months ago. However, this victory was not perfect.
According to Filitti, Twitter got what it wanted at Musk’s expense. At the same time, the company also avoids “exorbitant” legal fees that will cause huge losses to the company and everyone involved.
However, according to Associate Professor Paul Reagan of the Delaware Institute of Corporate and Commercial Law, the sustainability of Twitter following Musk’s acquisition remains an open question. “The future of Twitter was so unpredictable, and now Musk is a reluctant buyer,” Regan commented.
Meanwhile, Twitter shareholders stand to gain the most from the deal. Some people have amassed hundreds of millions of dollars since Twitter stock rallied. For example, billionaire investor and CEO Icahn Enterprises has poured $500 million into Twitter over the past few months. After Musk said he would return to the deal, shares rose 26 percent, earning him at least an additional million dollars. WSJ.
Similarly, Florida-based Pentwater Capital made more than $200 million on a surge in Twitter stock, according to the report. CNBC. Pentwater Capital is currently one of the largest shareholders in the social network.
Also mentioned Parag Agrawal, CEO of Twitter. He was reluctant to take over the management of the company from founder Jack Dorsey. He has been criticized a lot in the past for sailing his Twitter boat in storms. Due to disagreements with Musk, Agrawal is expected to lose his position as CEO once the deal is finalized. consequences people in business, Even if it happens, it maintains a good image among employees and the public.
In addition, the legal team also earned large sums of money. Experts say Musk may still have to shell out as much as $200 million in legal fees after attorneys spent months filing nearly a thousand lawsuits and hundreds of subpoenas.
M&A attorneys can make $2,500 an hour, according to Anat Alon-Bek, a professor of commercial law at Case Western Reserve University. He estimates Musk’s legal fees at around $30 million. “The biggest winner of this deal is the law firm,” Alon-Bek said.