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Good, good, good. Look who’s asking to buy Twitter for the exact same price he agreed to pay four months ago…
In a major reversal just days before he was scheduled to testify, Elon Musk offered to complete the acquisition of Twitter under the original deal terms the two sides agreed to in May.
In a statement to CNN, a Twitter spokesperson said the company received Musk’s offer and reiterated its intention to close the deal at the original price of $54.20 per share, or $44 billion.
It is unclear when or if Twitter will accept the offer. The case is still likely to go to trial.
Twitter’s stock was suspended twice on Tuesday and rose more than 20% when it resumed trading.
Let’s take a step back: Even in a trade with an unexpected twist, Tuesday’s development was terrible. Pre-trial settlements are not uncommon, but settlements for the exact same price are.
If the deal goes ahead, it will be a costly win for Twitter. The company will succeed in getting the best price for shareholders (if you can get it, great). But it will also hand the keys to a fickle billionaire with little knowledge of how media companies work and whose history on the platform is that of an unfiltered troll.
Musk is the clear loser here, having to use his billions to fund deals for companies he no longer wants.
The winner of all this? lawyers.
Twitter sued Musk in July in an attempt to force him to close the deal, sparking a months-long legal battle among some of the most powerful white-shoe law firms in the United States.
According to Bloomberg, Twitter hired Wachtell, Rosen, Lipton and Katz — an elite New York firm with partners making about $8 million a year. On Musk’s side is another Wall Street power company, Skadden, Arps, Slate, Meagher & Flom.
Delaware attorney Peter Ladig, who has extensive experience in court in the Musk-Twitter battle, said the two sides’ bills could easily add up to the eight-digit figure. (“Eight figures” is just an incredible way to express the concept of $10 million. at the lowest limit. )
“It looks like Twitter is using everything they have on the body, and it adds up quickly,” La Digue told me. “I’m guessing you’re talking about maybe at least 20 lawyers. That’s a huge amount of data.”
The timing of Musk’s latest pivot cannot be ignored. He was due to start his testimony on Thursday, ahead of the trial scheduled for Oct. 17.
“This is usually the leverage point,” La Digue said. “When it comes to CEOs… being ousted, a lot of cases are settled on the eve of the ouster.”
There’s a lot to unravel here, and my colleague Clare Duffy has done it.
For reasons no one really seems to understand, stocks rose sharply again on Tuesday.
The Dow has surged more than 1,500 points in the past two days, emerging from a bear market and reaching the 30,000 mark.
“It almost felt like a panic rally. Sentiment got too bad and people started pouring in,” said Callie Cox, U.S. investment analyst at eToro. “But the rally felt casual. It’s nice to see stocks rising, but the moves are a little disorienting. ”
My colleague Paul R. La Monica has more.
If you made a movie of the past few days at Credit Suisse, you might open with a scene-setting shot of stock and bond traders looking miserable, hands on their heads and ties skewed. There will be scenes of crazy bankers spending the weekend on the phone with clients, assuring them that everything is fine. A CEO would take a slow sip of a scotch and read a memo reassuring employees that leadership is doing everything it can to avoid layoffs…
As a connoisseur of the Wall Street crisis genre, I’d go all out.
But it looks like the real drama of the Swiss bank might not produce the cinematic crash we’ve come to expect in the shadow of the 2008 financial crisis.
Here’s the thing: Speculation about the imminent collapse of Credit Suisse sparked Monday’s sell-off, with the bank’s shares hitting record lows. Investors and commentators were quick to speculate whether Credit Suisse was the new Lehman Brothers—almost exactly 14 years ago, the first Wall Street domino to fall in the subprime mortgage crisis.
This fear is understandable. When faced with a complex and scary problem, we tend to look back at past solutions, hoping we can now see what we couldn’t see then.
But, as my colleague Julia Horowitz writes, concerns about Credit Suisse reflect more about the ~sentiment~ of the market than the financial health of the bank.
Credit Suisse has been hit by scandals and fines over the years. And there are still risks ahead. But it’s far from bankruptcy. One analyst even described Credit Suisse’s liquidity position as “healthy.”
That’s part of the reason why the panic was fading by Tuesday. Credit Suisse shares rallied along with the broader stock market.
“I don’t see this as a ‘Lehman moment,'” Mohamed El-Erian, an adviser to Allianz, said on CNBC on Monday.
It’s not hard to see why investors are being triggered by Credit Suisse’s recent volatility, triggered by a memo from the CEO that, far from reassuring, raised concerns that the bank’s fundamentals are more fundamental than they appear. Unstable.
Combine this anxiety with related anxiety Or a looming global recession and turmoil in the UK bond market, and you’ve got a big anxiety shake.
Everyone on Wall Street wants to get ahead of the next big risk, remember it doesn’t always come from where you expect it to be. (For example, few saw the danger in the subprime mortgage deal that predicted the housing market crash of 2008.)
Jose-Luis Pedro, professor of finance at Imperial’s business school, said the devil is always in what you don’t know, and as far as we know, Credit Suisse could be exposed to risks that the market doesn’t know. School.
A silver lining: We haven’t had some guardrails since 2008. Larger banks now have much higher capital requirements than before the crisis, which should reduce the risk of contagion from any one failure.
Credit Suisse is far from insolvent, but even if things do go from bad to worse, it’s unlikely to bring the whole ship down.
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