{"id":49608,"date":"2022-06-14T02:12:29","date_gmt":"2022-06-14T02:12:29","guid":{"rendered":"https:\/\/harchi90.com\/musks-44bn-twitter-deal-is-an-ma-arb-dream-or-nightmare\/"},"modified":"2022-06-14T02:12:29","modified_gmt":"2022-06-14T02:12:29","slug":"musks-44bn-twitter-deal-is-an-ma-arb-dream-or-nightmare","status":"publish","type":"post","link":"https:\/\/harchi90.com\/musks-44bn-twitter-deal-is-an-ma-arb-dream-or-nightmare\/","title":{"rendered":"Musk’s $ 44bn Twitter deal is an M&A arb dream – or nightmare"},"content":{"rendered":"
Elon Musk’s fitful attempt to take over Twitter is shaping up to be the event of the year for hedge funds that bet on takeover deals going through or collapsing. <\/p>\n
Musk’s marijuana-inspired $ 54.20-a-share offer has helped keep Twitter’s shares aloft, even as the rest of the technology complex has been taken to the woodshed in recent months.<\/p>\n
For example, shares in Snap, another advertising-dependent social media company, have fallen 66 per cent since Musk first announced he had acquired a big chunk of Twitter in early April. If Musk succeeds in walking away from the agreed $ 44bn acquisition – as he now seems to be trying – then the collapse in Twitter shares will be the stuff of legend. <\/p>\n
On the other hand, Twitter is at pixel time trading at $ 38.98 a share because of Musk’s prevarication, an exceptionally fat discount to an agreed and theoretically binding takeover price. That makes it a tempting target for M&A arbitrage hedge funds, who make money from predicting whether deals will succeed or not – the kind of situation that can make or break someone’s year.<\/p>\n
\u201cThis is an arb traders dream,\u201d said Felix Lo, portfolio manager at Trium Capital. Musk’s erratic tweeting means \u201cthere’s practically a news item every day. Price fluctuations are good for us. “<\/p>\n