Shares of Twitter (TWTR) are in the spotlight yet again after Tesla’s (TSLA) CEO Elon Musk made an offer to acquire the company for about $41B or $54.20 per share in cash. This comes just days after the executive rejected a seat on the social media company’s board. The Fly notes that on April 4, Musk disclosed a 9.2% stake in Twitter and had later agreed to become a director and to acquire no more than 14.9% of Twitter’s common stock. Following this morning’s news, Stifel analyst Mark Kelley downgraded Twitter to Sell as he believes Musk’s offer sets a “near-term ceiling” on the shares, detaches the stock’s trading from fundamentals, and offers “significant downside risk” if the world’s richest man decides to abandon his offer or sell down his stake.
OFFER TO BUY TWITTER: On April 13, Elon Musk delivered a letter to Twitter which contained a non-binding proposal to acquire all of the outstanding common stock of the company not owned by himself for all cash consideration valuing the stock at $54.20 per share. In a regulatory filing, Musk said that, “This represents a 54% premium over the closing price of the common stock on January 28, 2022, the trading day before [I] began investing in the company, and a 38% premium over the closing price of the common stock on April 1, 2022, the trading day before [Musk’s] investment in the company was publicly announced. The proposal is non-binding and, once structured and agreed upon, would be conditioned upon, among other things, the (i) receipt of any required governmental approvals; (ii) confirmatory legal, business, regulatory, accounting and tax due diligence; (iii) the negotiation and execution of definitive agreements providing for the proposed transaction; and (iv) completion of anticipated financing.”