Elon Musk, Twitter’s largest shareholder and largest agitator, this morning offered to buy the rest of the social media company and make it private. His “best and last” bid, he said in a financial filing, is $54.20 a share, nearly 40 percent above Twitter’s share price in January, before the mercury billionaire began buying.
The show culminates in an exceptional two weeks for Twitter and Mask, which began with the Tesla boss’s disclosure that he had built a more than 9 percent stake in the company, framed at the time as a passive investment. Twitter offered him a seat on the board, but he declined it, removing any restrictions on his actions. “After the past several days of thinking about this, I’ve decided I want to take over the company and take it private,” Musk said to Twitter CEO Brett Taylor, in a communication published today.
Musk said he has lost faith in managing Twitter To fulfill the company’s “community imperative” as a platform for freedom of expression. “Twitter has extraordinary potential,” Musk said. “I will open it.” He said he had hired Morgan Stanley as an advisor to the tender and would not play a “home and away game” with his bid.
Is this real? It may seem strange to ask about someone who has a net worth of $270 billion, but it’s worth noting that there are no details about the financing of Musk’s proposal. His Twitter bid is valued at more than $40 billion, but his fortune is mostly in Tesla stock, and that company puts limits on what he can borrow for the stock. If Musk needs debt financing, he has built bridges with major lenders, such as JPMorgan Chase, so his choice of Morgan Stanley, which has a smaller balance sheet, is noteworthy. (Egon Durban of Silver Lake, the director of Twitter, has experience making tech companies private, but his own company has a freeze agreement with Twitter that appears to limit participation in an acquisition.)
No, seriously, is this real? Musk will face questions about whether he has the ability to buy the social media giant personally given his day-to-day jobs as CEO of Tesla and SpaceX. (Twitter co-founder Jack Dorsey faced questions about whether he could be CEO of Twitter and Square, and quit Twitter.) Nor has market watchers lost sight of the fact that $54.20 a share is an echo of the notorious Masker, the ill-fated 2018 proposal to take Tesla private. At $420 per share. (For starters, 420 is slang in cannabis culture, and Musk often uses it in more playful contexts.) More relatedly, Twitter shares jumped into pre-market trading based on Musk’s bid, but remained well below his price – trading at a higher price. of his presentation. For most of the past year, he’s challenged his assertion that “it’s a high price and your shareholders will love it.”
what happened after that? Twitter said it would “carefully review the proposal to determine which course of action it believes is in the best interest of the company and all of Twitter’s shareholders.” Dan Ives, an analyst at Wedbush, told DealBook that Musk’s approach “will put incredible pressure on the board from a credit perspective.” Twitter’s board is likely to argue that the price is too low and question the strategic direction of the company in Musk’s hands. (For example, Musk suggested that Twitter should get rid of ads, its main source of revenue.) The board can put in so-called poison pills, to prevent Musk or others from buying more shares, but other investors may not. like that.
For a company that has had quite a few issues, including past brushes with active investors, the past few days have introduced a whole new level of drama.
Here’s what happens
Starbucks may exclude union employees from the new benefits. Howard Schultz, Starbucks’ interim CEO, told store managers that proposals intended to help reduce attrition rates would not initially apply to newly unionized employees. The move raised questions from legal experts.
Amazon will ask third-party sellers for “fuel and inflation surcharges.” The additional cost will add 5 percent to Amazon’s inventory holding fee for delivery to customers. FedEx and UPS have also raised fees in response to fuel costs.
The state of jobs in the United States
Job opportunities and the number of workers who left their jobs voluntarily in the United States remained near record levels in March.
The White House warns that supply chain problems will not end with a pandemic. President Biden’s top economists say shortages and shipping bottlenecks will persist if America does not invest in its supply chain. The report also called on the government to do more to increase productivity and combat inequality.
The flight mask mandate continues. The CDC said yesterday that travelers on planes and mass transit will be required to wear masks until at least May 3. Profits at airlines, which have requested de-authorization, are rising as travel approaches pre-pandemic levels.
Economists describe China’s official growth target as unrealistic. Experts say China’s “zero COVID” policy will make it nearly impossible to achieve 5.5 percent GDP growth this year. About a third of China’s population, or 373 million people, are under some kind of pandemic lockdown.
Banking to consumers
A key part of the US pandemic recovery guide has been putting money into consumers’ pockets. Mostly worked. But the results of the first quarter of this week from major banks reveal warning signs about the state of the American consumer, whose spending represents more than two-thirds of the country’s economic output.
Earnings under pressure. At JPMorgan Chase, the nation’s largest bank, profit for its consumer division fell 57 percent from a year ago. Profits for Wells Fargo and Citigroup’s consumer banking units fell 16 percent and 23 percent, respectively, they reported today. JPMorgan CEO Jamie Dimon told analysts in a phone call yesterday that he has been watching inflation, rising interest rates and the war in Ukraine. “These are storm clouds on the horizon that may disappear,” he said, or “may not.”
Riskier lending raises concerns. The 60-day delinquency rate on high-risk auto loans in the US was about 5 percent in February, the highest since early 2020 and less than 4 percent a year ago. What’s more, investors are turning down risky loan deals, and some “buy now, pay later” lenders, who have thrived under pandemic restrictions, have seen their shares plummet: Affirm’s stock is down 60 percent this year.
But consumers are still spending. Yesterday, Bank of America reported that consumers spent 11 percent more on their credit cards in March than a year earlier. Spending rose 15 percent in the first eight days of April. However, recent results from banks indicate that there is a limit to what consumers can spend without problems. “Consumer credit used to be free to banks, and that will no longer be the case,” said banking industry consultant Christopher Wallen. “Consumers are not going to drive the economy the way they used to.”
“These companies are doing well during this vibrant and frothy capital markets environment. The world has changed dramatically in the past 60 days.”
– Ken Smith of Next Round Capital Partners talks about the prospects for delivery startups, whose pandemic orders are starting to fade. Gopuff, based in Philadelphia, has raised more than $3 billion in funding and Think they can do express delivery differently.
Using antitrust law to protect workers’ wages
The Ministry of Justice relies on an old law in a new way. The Sherman Act of 1890 prohibited companies from conspiring to harm consumers. Initially, the government filed a series of criminal cases accusing employers of complicity in cutting wages, according to The Times, Eduardo Porter.
If the courts agree, that could fundamentally change the relationship between workers and employers. The department has filed six criminal cases under the antitrust law. The push began late in the Trump administration, and President Biden retaliated against it.
American companies are upset. “There is a role for antitrust in labor markets,” said Shaun Heather, senior vice president of antitrust at the US Chamber of Commerce. “But it is limited.”
Is JPMorgan’s New Weekend Policy an Improvement?
Last year, financial firms across Wall Street pledged to better manage employee workloads after junior bankers spoke of grueling hours. But did the changes help combat burnout?
The debate continues at JPMorgan, which has a new leave policy for small investment bankers: 10 federal weekends, analysts and assistants can choose one weekend each quarter to sign off and not be contacted if work goes out. Previously, the bank allowed these workers to protect one weekend per month.
JPMorgan said its policy was the best ever. There are guaranteed vacation days for weekends around holidays such as Thanksgiving, Memorial Day, and Juneteenth, as well as four weekends a year that workers choose themselves.
But not all bankers agree. they say someone It should always be available during federal weekends if work comes up (like a big deal). And now they have fewer options to dedicate other weekends to personal events such as weddings.
Fatigue has become an industry-wide discussion amid a surge in deal volumes last year. Banks responded with policies to improve business conditions. For its part, JPMorgan has encouraged bankers to leave the office by 7 p.m. on weekdays, among other things. But long hours and unexpected workloads have long been part of the reality of the industry. Is JPMorgan’s new vacation policy an improvement or is it just more of the same?
Speaking of vacation, DealBook is taking a break tomorrow for the Good Friday holiday.
Russia and Ukraine war
The United States will send another $800 million in military aid to Ukraine. (The New York Times)
The British territory of Jersey has frozen $7 billion in assets believed to belong to the Russian oligarch Roman Abramovich. (The New York Times)
Germany has confiscated the world’s largest luxury yacht, saying it was owned by Russian oligarch Alisher Usmanov. (inside)
Activist investor Blackwells Capital has again called on Peloton to seek a sell-off. (CNBC)
Blackstone and the Benetton family have submitted a $20 billion bid to Italian infrastructure group Atlantia. (Foot)
A shareholder has filed a lawsuit to prevent Berkshire Hathaway’s $11.6 billion takeover of Alleghanway. (Reuters)
Mick Mulvaney, a former Trump administration official, will advise on Astra Protocol, a crypto compliance firm. (Bloomberg)
E-cigarette giant Juul has agreed to a $22.5 million settlement with the state of Washington over accusations of marketing to underage users. (Bloomberg)
Meet Gerald Megdoll, the Harlem real estate developer at the center of the FBI that ousted New York’s lieutenant governor, Brian Benjamin. (The New York Times)
The best of the rest
In several states, teachers received the largest increase in decades. Will you improve education? (The New York Times)
Intel has a lot of work to do to achieve its net zero emissions goal. (protocol)
“America’s Highest Income and Their Taxes Revealed.” (Propublica)
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