Forager seeks answers in Musk/Twitter deal

twitter Elon Musk Forager

14 July 2022
| By Laura Dew |
image
image
expand image

Twitter’s actions in holding Elon Musk to account “cannot be faulted”, according to Forager, which holds exposure to the stock in its International Shares fund.

Earlier this year, Tesla founder Musk stated he joined the board of Twitter and was looking to acquire it for $61 billion, something Forager described as undervaluing the company.

However, it had since backtracked on that decision and Twitter had taken steps to commence legal action against Musk for rescinding on the agreement and to force closure of the deal at the agreed price.

Shares in the social media, which peaked at US$51 (A$75.5) in April, had since fallen to US$32 and were down 14% in the past five days to 11 July.

Forager co-portfolio manager, Gareth Brown, said: “Surely nobody is any longer under the misapprehension that Musk can just pay a $1 billion break fee and walk away? He waived away his due diligence rights, signed a contract and then changed his mind after the stockmarket tanked. Elon might currently be "walking away" from the deal, but he's about to be dragged back to the table

“The cult of Musk has allowed him to skirt and renegotiate a lot of rules that apply to the rest of us, from Occupational Health and Safety regulations to Securities Laws. But this is a matter of contract law now, in a country that hold contracts sacrosanct, in front of a judge in a state not know to be friendly to acquirers with cold feet.”

The biggest risk now, Brown said, was that the board would agree to a reduced price in order to quickly close the deal.

“We've spent a lot of time criticising the Twitter board in the past, but they can't be faulted here. They've held their ground and ignored Musk's theatrics, while pushing to close the deal. As shareholders, we hope to see that continue and think we'll have some concrete answers here in as soon as a few months.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

1 month 2 weeks ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

1 month 3 weeks ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

1 month 3 weeks ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 days 16 hours ago

The Reserve Bank of Australia has made its latest rate call, with only two more meetings left for 2024....

2 weeks 4 days ago

Financial advisory group AZ NGA has announced a strategic partnership with a $294 billion global investment manager to support its acquisition plans....

1 week 5 days ago