(Source = Reuters Union)

Musk suddenly promises to “relist on Twitter within 3 years”… `To attract investors vs `Confidence to grow’

(Source = Reuters Union)

The Wall Street Journal reported on the 3rd (local time) that Tesla CEO Elon Musk, who had promised to “delist” Twitter if he took over, suddenly promised “Twitter will be relisted within three years.”

Earlier, Elon Musk announced on April 4 that he would acquire the entire company for $44 billion at the end of April after acquiring a 9.2% stake in Twitter. Musk has not hidden his dissatisfaction with the management policy, saying that Twitter is suppressing ‘freedom of expression’ since he started Twitter activities. After taking over Twitter, he has declared that he will delist the company to eliminate institutional surveillance and protect freedom of expression.

Twitter’s board of directors defined Musk’s takeover attempt as a hostile M&A and opposed Musk’s takeover offer in ways including poison pills, but decided to sell the company for $46.5 billion after the meeting. Musk is concentrating on raising money for a formidable acquisition.

Recently, Musk has contacted private equity funds such as Apollo Global Management and is looking for investors. This is because Musk alone has a limit in raising money for the acquisition. So far, it is known that the company has borrowed $12.5 billion in loans using Tesla stock as collateral, and $13 billion in loans using Twitter shares that it will hold in the future. A significant portion of the acquisition price is still insufficient. If Musk’s acquisition of Twitter was canceled because Musk failed to raise funds, the penalty could be as high as $1 billion.

For this reason, it is argued that Musk’s mention of ‘Twitter relisting within 3 years’ is just a pun in order to gather investors to join the Twitter acquisition. Musk announced a plan to delist for the sake of freedom of expression, which he has strongly insisted on, but the opinion is that the only reason to overturn this is to secure acquisition funds. Investors may have doubts about how Musk’s future plans to recoup his investment after he announced that he would delist Twitter. In order to resolve these questions, he criticizes that the intention is to reassure potential investors by delisting first and then re-listing.

On the other hand, some interpret Musk’s remarks as a sign of confidence. Relisting after a company has been delisted is a common occurrence in the stock market. It is argued that this is similar to the case of private equity funds collecting funds to take over a company, then restructuring to improve company performance and re-listing. Usually, this period is considered to be about five years, but Musk’s suggestion of three years is interpreted as his confidence that Twitter can be reformed quickly.

However, Forbes said, “It may be overly optimistic to reform after three years.” Musk also suggested a deadline for Tesla, such as the Model 3 production schedule, and failed to keep it several times. He was insensitive to schedule prediction.

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