A drop in Tesla’s share price and a slide in Twitter’s value could have suitors circling.
It might not be the Elon Musk/Twitter roadshow for much longer.
While the Tesla (TSLA) – Get Tesla Inc Report tech billionaire’s $44 billion offer for the social media platform is still technically in place, it has hit some substantial hurdles over the last few days.
Musk’s courting of Twitter has sucked all the oxygen out of the news cycle for weeks now, as he vacillated between being an active investor and a passive investor and back again, spooling out information about his plans for his company one SEC filing at a time.
Twitter (TWTR) – Get Twitter, Inc. Report also participated in the back-and-forth, adopting a poison pill strategy to ward off any takeover and pushing Musk to unveil his financing plans for any real offer and how it might work.
Much of that interplay was largely expected to be over by now, after Musk’s official bid was accepted on April 25.
But in typical fashion for both parties — each of which is known for having opaque strategies and seemingly impossible business plans — the deal is now facing news questions as parts of it begin to crumble.
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Will Elon Musk Buy Twitter?
The $44 billion question on everybody’s minds is if Musk will still be able to scrape up the financing needed to push through his bid of Twitter long enough for the deal to be approved.
So far, it’s not looking great.
Tesla investors spooked by the possibility of the company losing its value after its shares were included as collateral in the Twitter deal exited its stock in droves on April 26.
That sent Tesla’s share price nosediving 12% in trade that day, a loss it continued on April 27 before slightly regaining its position.
The loss erased $126 billion in value in one trading session — a painful haircut for a billionaire counting on one of history’s largest leveraged buyouts to pay for his Twitter bid.
Meanwhile, Twitter itself lost almost 6% in trading on April 26 and April 27, with its share price sitting around $48.
That’s a big gap between the $54.20 per share Musk has offered to pay for the company, and a sign that investors aren’t particularly keen to put him in the CEO chair anytime soon.
Who Else Might Try to Buy Twitter?
With both sides seeing valuations fluctuate and hesitant investors on both halves of the aisle, the future of Musk’s marriage to Twitter seems anything but certain.
That’s lead to a new round of Twitter/Musk fever: Guessing who might try to buy the microblogging site next.
The deal has resurface the names of prior suitors including Marc Benioff of Salesforce (CRM) – Get salesforce.com, inc. Report and Disney (DIS) – Get Walt Disney Company Report, both of which have made overtures to Twitter in the past, and raised the idea of new ones.
Tech may not be the only possible partner — private equity giant Thoma Bravo is rumored to be sizing up the company, and other PE players may like its potential but be realistic about where it needs some trimming.
And if all else fails, there is always Microsoft, says pundits who point out that buying Twitter would be a non-go for anything even slightly resembling an antitrust issue, like Amazon, Google or Facebook.
“The last path is something I suggested yesterday — get a new CEO, one who is capable of fixing the company’s fundamentals, making it more efficient and ultimately profitable,” writes longtime Silicon Valley watcher Om Malik in a blog post.
Microsoft (MSFT) – Get Microsoft Corporation Report might be the only company large enough to wrestle with Twitter’s regulatory hurdles while also managing its 5,000-person workforce and free speech mission.
So What Does All This Mean For The Twitter Deal?
For now, the fact that Musk has put together a deal that is looking increasingly unlikely.
Even a $1 billion backout fee imposed in Musk’s contract with Twitter is unlikely to sting if Tesla regains its share price momentum.
That Musk has bought Twitter while simultaneously trolling the company has lots of people wondering if his bid was ever sincere.
If not, there are companies in the wings that might jump in as a white knight bidder — all while leaving Musk with regained Tesla share strength and a new parent for the world’s English-speaking de facto town square.
“A strong player could start by putting together a syndicate of investors — both private and strategic to push Musk back into its corner of the Internet,” Malik wrote on April 16.
“And if that does happen to pass, in a few years, we might look back at Musk’s bid for Twitter as the best thing that happened for the company. Given Twitter’s history of meandering mediocrity, I am not holding my breath.”
