May 11, 2022

The ‘high-stakes’ poker game between Twitter and Elon Musk may have this next step: Wedbush

Maja Hitij/Getty Images News

Twitter (NYSE: TWTR) and Elon Musk are embroiled in a “high stakes” game of poker as the world richest man laid On Thursday, he unveiled his financing plans to pay the social network.

However, the next stage of the battle will likely include the search for a proverbial “white knight” and a possible takeover bid, Wedbush Securities said.

Analyst Dan Ives noted that by adopting a poison pill on Twitter (TWTR), which would dilute Musk’s stake if he bought more than 15% of the company – he currently owns 9.2% – it has given the company time to find a second bidder. With Twitter expected to report earnings later this month, Musk’s funding lined up and the board likely to formally reject the $54.20 per share offer, the battle is set to continue.

“Then in the next poker move, Musk will probably make a formal takeover bid for Twitter shares and if successful (above the 35%-40% threshold, it will put pressure on the board board), negotiations will likely begin between the board and Musk,” Ives said. written in a note to customers.

Twitter shares (TWTR) rose more than 0.5% to $47.37 in premarket trading on Friday.

Ives compared the battle between Musk and Twitter (TWTR) to that of Oracle (ORCL) and Larry Ellison, when they spent 18 months leading a hostile takeover of PeopleSoft.

“The elephant in the room and the key variable to the whole Twitter situation is if a second bidder emerges next week for the private equity firm and puts more pressure on Musk to increase his bid. “, Ives explained, adding that Twitter (TWTR) is not “an ideal [private equity] OPA” due to its business model and lack of free cash flow.

Late Thursday, it was reported that Musk was in talks with private equity firm Thoma Bravo about partnering on a potential takeover bid on Twitter.