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A lot of people are wondering what’s going to happen next in the Elon/Twitter saga.

Here is a 🧵 on what the process looks like & why I’m bullish on Elon owning Twitter.

Twitter can’t just say “sold” or “not sold.” Public companies must go through a rigid process whenever (1)— BowTiedRanger (@BowTiedRanger) April 14, 2022

they receive a tender offer.

Twitter must now form an independent committee with its own advisors to evaluate the offer & determine the “entire fairness” of the offer, which will prob require them to run a sale process. Essentially, they will have to shop around the offer. (2)

The deal is also contingent on Elon obtaining debt (Elon said he would take debt, which he should), which is a big hurdle.

No other offer is going to come even close to the price Elon is offering, making it highly unlikely a shareholder would sue if they took Elon’s offer. (3)

When Elon rejected the board seat, the price dropped, making the offer premium look even sweeter. And also highlighting that Elon controls a good bit of Twitter’s share price. Which is a huge turn off to potential buyers.

As for debt, it’s probably (4)

going to be a $20BN+ financing package, which will require a fairly large group of lenders.

The collateral for the lenders is Twitter post-acquisition so the underwriters need to get comfortable with what that exactly means. Loan values that high need to go to investment (5)

committees, go through internal controls & compliance, regulatory approvals, etc. Lot of red tape here.

For purposes of the “entire fairness” standard, the burden is on the acquirer (Elon) so the events leading up to the offer will be scrutinized, to include the arguable (6)

stock price manipulation from the back & forth over the board seat.

So how do I think it will play out?

I am bullish on Elon owning Twitter at the end of this journey. (7)

Elon might get frustrated with the process which the board & management could lean into to elongate to try & push him away— but, there’s no way they’ll come to the conclusion that the price is not fair. (8)

I could also see a truly independent committee come to a swift conclusion that it’s fair & get to a shareholder vote ASAP w/in statutory & regulatory guidelines.

But, absent Elon getting frustrated with the process and walking away, I think Twitter will be his. (9)

This is such a new frontier—it’s not even a hostile takeover, it’s a gift-wrapped takeover from a single individual shareholder. Not an institutional sponsor, but the world’s richest man. Elon is playing games that no one else can play. (10)