Is Elon Musk’s deal to buy Twitter Inc. “temporarily on hold”? On the one hand, he did tweet that last week. On the other hand, as I wrote at the time, no:
“Temporarily on hold” is not a thing. Elon Musk has signed a binding contract requiring him to buy Twitter. Legions of bankers and lawyers and Twitter employees and special-purpose-vehicle promoters are working to fulfill his legal obligation to get the deal closed.
At Bloomberg News yesterday, Michelle Davis and Liana Baker reported that nothing is on hold:
Behind the scenes, it’s more like business as usual, as advisers on both sides plug away at the day-to-day work of closing a megadeal.
One potential sign that the deal is still on track: the 139-page filing that hit early Tuesday, detailing how the offer came together and Twitter’s rationale for accepting it. That document was the result of weeks of coordinated work by both Musk and Twitter’s teams, according to people familiar with the matter. Musk himself signed off on the final version — complete with a deal price of $54.20 a share — before it was filed, the people said.
The situation is similar at the banks that promised to finance the transaction, said the people, who asked not to be identified because the details are private. While texts are flying among bankers in disbelief at Musk’s antics, their days are still filled with preparing documents needed to proceed with and close the purchase, the people said.
Yeah when you turn this machine on, it’s hard to turn it off. Twitter’s board of directors and executives obviously want the deal to close. (I suppose many of its employees have mixed feelings.) Twitter’s advisers — its bankers and lawyers — want it to close, since that’s generally how they get their fees and their league-table credit. They are all working to get it closed.
Musk’s advisers also want their fees and league-table credit, though Musk’s bankers are a bit more conflicted because (1) they have also agreed to finance his purchase and (2) that financing is kind of risky. (Also at Bloomberg, Paula Seligson reports that “to sober-minded credit analysts, second thoughts about the deal are to be expected,” given Twitter’s high pro forma leverage and limited free cash flow.) It would probably be something of a relief for Musk’s bankers if he gets out of this thing, given the state of the markets and his own cooling enthusiasm for Twitter. Still, every big-time investment banker would rather get the glory, fees and league-table credit that come from closing a huge hairy deal than the good night’s sleep that comes from saying “meh, never mind.”
That said, Musk keeps tweeting stuff, so nothing is certain. Mostly he has been distracted by politics and forgotten his complaints about Twitter’s bot problems, though yesterday he tweeted “[face with tongue emoji][popcorn emoji],” which might be deal-related, who knows. I guess we’ll see if his lawyers file that tweet with the SEC. If they do, you know it was a material communication about the deal.
I wrote the other day:
Arguably Twitter’s best option is to do nothing: Let Musk tweet, ignore him, and continue acting as though everything is normal and the deal is going to close. Don’t give him any more pretexts to walk away, just keep trying to get regulatory and shareholder approvals, and then come to him ready to close and see how serious he is about all of this. The basic problem with Musk, for Twitter, is that he changes his mind a lot. Maybe he’ll change it again.
And that does seem to be Twitter’s approach. “‘We intend to close the transaction and enforce the merger agreement,’ the board said Tuesday in a statement to Bloomberg News,” but it has not engaged much with Musk’s nonsense, and he does seem to have moved on to politics (and complaining about Tesla Inc.’s removal from an environmental, social and governance index). Twitter thinks the deal is on, Musk’s bankers and lawyers think the deal is on. Maybe he’ll be so busy tweeting that he’ll forget the deal is off.