JAKARTA - Investors speculating whether Elon Musk will complete his $44 billion acquisition of Twitter Inc sent the social media company's shares on Wednesday, April 27, to their lowest level since the deal was announced two days ago.
Brokers are starting to worry that Musk may not have enough cash to fund a $21 billion cash contribution and may decide not to sell some Tesla Inc shares to make up for the shortfall.
Elon Musk is considered to have had doubts. Because, earlier this month, he decided at the last minute not to take a seat on Twitter's board. In 2018, Musk also tweeted that there was "guaranteed funding" for a $72 billion (Rp1036 trillion) deal to make Tesla a private company, but he ultimately discontinued the offer.
In addition, Musk only had to pay a breakup fee of $1 billion (Rp. 14.4 trillion) which is only a fraction of his fortune estimated by Forbes at US $ 240 billion (3455.7 trillion), to cancel the acquisition.
"There are a lot of major risks over the next six months needed to complete the deal," said Chris Pultz, portfolio manager for merger arbitration at Kellner Capital.
Twitter shares on Wednesday ended trading in New York down 2.1% at 48.68 dollars per share. This is a huge discount to Musk's $54.20 bid price
According to Reuters calculations, this also implies a 62% chance of the deal being completed. Musk, who has no other media holdings, will certainly not face antitrust scrutiny over the Twitter acquisition.
Tesla shares also fell more than 12% on Tuesday, making a loss of $126 billion in value, amid fears Musk would have to sell his stake in the electric car maker to pay an equity check of 21 billion in a Twitter deal.
But Musk could calm some of the market jitters by providing more details about the source of his equity financing or bringing in a partner to help buy twitter. However, this may pose new risks to deals based on the identity of these partners
Roy Behren, a managing member of Westchester Capital Management, which has $5.4 billion in assets under management, said the $1 billion deal termination fee was not high enough to make Musk think twice about leaving the deal.
"In the context of his net worth, and the size of the transaction, the fees (to cancel) are smaller than expected," Behren said.
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