Our takeovers and acquisitions over the last 40 years, have taught us that it is vital and necessary to conduct quiet due diligence on the publicly traded takeover target, to determine how viable it is from a financing standpoint.
Is it really a great price, and at that price is it able to be financed with the highest leverage ( loans to be structured) possible, to make it a viable acquisition, and then after all the loans taken to buy it, is there a profit still left for the new owner?
Elon Musk appears to have made an impulsive move to acquire TWITTER, without doing such simple due diligence and calculation of its financial viability.
However, his name and reputation at that time as the RICHEST person in the world ( using the over-hyped and overpriced Tesla stock as value), gave some impetus for his investment bankers to find a way to structure a really badly overpriced acquisition transaction. After all, they saw stratospheric fees and a $43 billion value.
” Elon Musk offered to buy Twitter for $54.20 a share, or about $43 billion.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk wrote in a letter sent to Twitter Chairman Bret Taylor.”
Why would any sane (normal) buyer want to buy this business which had an adjusted stockholders’ equity of approximately $6 billion, and a pretax credit loss from operations last year of $411 million and pay $43 billion???!
Some people have more money than brains, as they say.
From a financial standpoint, there was no reason to overpay for such a weak performing business at 7 times its net worth!
There was absolutely no reason to buy it at that price or even at half that price, especially since Mr. Musk suspected that a great deal more than 5% of its accounts were actually computer bots, an not really people who could or would generate a future profit for the company!
Musk should have said to the company that he could consider an acquisition AFTER due diligence FIRST…not after. On top of all his mistakes, he agreed to a $1 billion break p fee that he would pay if he did not conclude the deal!
Are Moe, Larry and Curly his financial advisors?
Twitter alone is really a boring company. It tries to sell advertising worldwide by having readers click on links….great thought but the year before it lost $1.3 BILLION….
Now the lawsuits-he said they said-bad guy, good guy, etc…
Our suggestion, find a REAL business, like maybe one of the legacy auto companies to merge with TESLA, the auto company and have a REAL business!
Tesla could buy Renault which has a market value approximating $7 billion, and also own 44% of NISSAN! WHAT A DEAL!!!!!
Elon, call us we got some ideas for you, that will make financial sense for you, TESLA and your stockholders.