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Elon Musk’s buyout bid for Twitter Inc. represents a nice premium over the price he paid for the large block of shares he already owns, but it might come as a disappointment for those who invested in the social media company just five months ago.
Musk, who is the “Technoking,” or chief executive, of Tesla Inc.
TSLA,
disclosed Thursday that he offered to pay $54.20 for all the outstanding Twitter stock
TWTR,
he doesn’t already own. That represented an 18.2% premium to the stock’s closing price on Wednesday, and values Twitter at about $43.4 billion.
Musk also noted his bid price was 54% above the closing price on Jan. 28, the day before he started buying Twitter shares, and 38% above close on April 1, the last trading day before he made his stake public.
Meanwhile, Musk’s buyout bid is 49.9% above what he paid for the 73.12 million shares of Twitter stock, or 9.1% of the shares outstanding, that he already owns.
In a 13D filing on after the April 5 close, Musk disclosed details of how many Twitter shares he bought on each trading day from Jan. 31 through April 1, and at what price. A MarketWatch analysis of that data shows that he paid $2.64 billion to buy that stock at a weighted-average price of $36.157.
So at $54.20, Musk’s 73.12 million-share stake would be valued $1.32 billion more than what he paid for it.
FactSet, MarketWatch
Musk said he believes his “best and final” bid is a “high price” and that “shareholders will love it.” But there could also be investors who are rather disappointed, as the stock was closed above that bid price only about five months ago, at $54.53 on Nov. 3.
The bid is also 30.2% below the stock’s record close of $77.63 on March 1, 2021.
Investors appear to believe Twitter’s board won’t love the bid price either, as the stock slipped 0.5% in midday trading, paring an earlier intraday gain of as much as 5.8%, to trade 15.8% below the bid price.
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