With Eyes on Musk’s Bid, Twitter Stock Rose While the Market Fell.

Twitter stock NYSE:TWTR

Twitter Stock (NYSE:TWTR)

Twitter stock  (NYSE:TWTR) is down 2% today, giving up some of Tuesday’s 22% gain as the broader Internet sector bleeds a little red. However, Twitter’s stock is probably doing better than other competitor companies after developments in the company’s $44B takeover agreement with Elon Musk.

On Tuesday, it was reported that Musk’s lawyers had written to Twitter (NYSE:TWTR), suggesting that Musk intended to go through with completing the acquisition at the agreed price. However, a few criteria mentioned made it premature to think the drama was done.

The lawyers for Musk stated they would go through with closure “given that the Delaware Chancery Court enter an immediate stay of the lawsuit, Twitter (NYSE:TWTR) vs. Musk, et al…. and defer the trial.” In addition, it said that the transaction was “waiting receipt of the proceeds of the debt financing,” a phrase that usually means a positive conclusion even if the financiers are expecting significant losses due to the recent downturn in the credit markets.

Twitter (NYSE:TWTR) brief response to Musk’s letter—”The objective of the Company is to conclude the transaction at $54.20 per share”. It suggests that a temporary halt to the litigation has not yet been agreed upon. And the Court of Chancery in Delaware has shown no signs of slowing down the lawsuit, so far at least.

This also means you shouldn’t miss the rest of Wednesday’s news. A rescheduled (and controversial) deposition of Musk is still expected to begin in Austin on Thursday, and it seems that only greater deal certainty — such as a legal concession by Musk — can head it off. The trial is set to begin in only 12 days.

The same might be accomplished with money already in the bank (i.e., a completed agreement), but doing so would need swift and significant action on the part of the banks who have invested $12.5 billion in the $44 billion take-private deal and, as was previously indicated, are suffering severe losses. This includes a $500 million revolving credit line in addition to $3 billion in secured bonds, $3 billion in unsecured bonds, and $6.5 billion in loans.

Suppose Musk (who is personally liable for $33.5B in the Twitter stock purchase) has an urgent need for cash. In that case, Tesla stock might drop more than its current 6% decline by lunchtime on Wednesday.

Earlier, Gene Munster, an analyst at Loup Ventures, predicted that even if Musk acquired Twitter, he wouldn’t spend much time on the platform. Obviously, he has no interest in this resource.

Featured Image-  Megapixl @ Dolphfyn

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.