Musk-Twitter Deal Could Be Repriced Lower if Musk Walks Away, Says Hindenburg Research

Short-seller Hindenburg Research warned on Monday that Elon Musk's $44-billion (3,39,870 crore) offer to take Twitter private could get repriced lower if the the world's richest person walked away from the deal.

"Musk holds all the cards here," Hindenburg, which has a short position on Twitter, said in a report. "If Elon Musk's bid for Twitter disappeared tomorrow, Twitter's equity would fall by 50 percent from current levels. Consequently, we see a significant risk that the deal gets repriced lower."

Shares of the social media platform were down as much as 4 percent amid a broader market decline and touched $47.76 (roughly Rs. 3,690), their lowest level since Musk made his $54.20 (roughly Rs. 4,190) per share offer in April, calling it "best and final".

Twitter declined to comment.

"Interesting. Don't forget to look on the bright side of life sometimes!" Musk tweeted in a light-hearted response, to which the short-seller said it expects Tesla shareholders will thank him if the deal is done at a "more reasonable price".

Hindenburg said the deal has seen a number of developments, from financing to board approval, which could have weakened Twitter's position.

"We are supportive of Musk's efforts to take Twitter private and see a significant chance the deal will close at a lower price," Hindenburg said.

The short-seller said Tesla chief executive could walk away paying the $1 billion (roughly Rs. 7,725 crore) breakup fee and has an incredible leverage to renegotiate if he chooses to.

Last month, Twitter secured a $44-billion (3,39,870 crore) cash deal to sell itself to Musk, who received over $7 billion (roughly Rs. 54,080 crore) in funding from high-profile investors, including Oracle's co-founder Larry Ellison and Sequoia Capital.

Angelo Zino, analyst at CFRA Research, said there is a high probability that the deal would close at the stated offer price, except if Musk has a change of heart.

© Thomson Reuters 2022