Elon TWTR Opportunity

[mongo]

This situation has some parallels to the TSLA go private event.
Elon has offered (with conditions) to buy out Twitter at $54.20. https://www.sec.gov/Archives/edgar/data/1418091/000110465922045641/tm2212748d1_sc13da.htm

Exhibit B





Bret Taylor


Chairman of the Board,





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.





However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.





As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.





Twitter has extraordinary potential. I will unlock it.

/s/ Elon Musk

Elon Musk















Script





[SEND VIA TEXT]





As I indicated this weekend, I believe that the company should be private to go through the changes that need to be made.





After the past several days of thinking this over, I have decided I want to acquire the company and take it private.





I am going to send you an offer letter tonight, it will be public in the morning.





Are you available to chat?





[VOICE SCRIPT]

1.

Best and Final:

a.

I am not playing the back-and-forth game.

b.

I have moved straight to the end.

c.

It's a high price and your shareholders will love it.

d.

If the deal doesn’t work, given that I don’t have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder.

i.

This is not a threat, it's simply not a good investment without the changes that need to be made.

ii.

And those changes won't happen without taking the company private.

2.

My advisors and my team are available after you get the letter to answer any questions

a.

There will be more detail in our public filings. After you receive the letter and review the public filings, your team can call my family office with any questions.

Thanks to @CLK350

Also terms:

On April 13, 2022, the Reporting Person delivered a letter to the Issuer (the “Letter”) which contained a non-binding proposal (the “Proposal”) to acquire all of the outstanding Common Stock of the Issuer not owned by the Reporting Person for all cash consideration valuing the Common Stock at $54.20 per share (the “Proposed Transaction”). This represents a 54% premium over the closing price of the Common Stock on January 28, 2022, the trading day before the Reporting Person began investing in the Issuer, and a 38% premium over the closing price of the Common Stock on April 1, 2022, the trading day before the Reporting Person’s investment in the Issuer was publicly announced.

The Proposal is non-binding and, once structured and agreed upon, would be conditioned upon, among other things, the (i) receipt of any required governmental approvals; (ii) confirmatory legal, business, regulatory, accounting and tax due diligence; (iii) the negotiation and execution of definitive agreements providing for the Proposed Transaction; and (iv) completion of anticipated financing.

If it goes through, my understanding is OTM options expire worthless on the sell date.
How can one profit?
Buy TWTR, sell long dated calls at $55, buy some shorter term puts to hedge?
Sell call spreads above $55?

Just watch the show?

 

[mongo]

Or it could be exactly the opposite... Sasha talks about the possibility of the offer putting a pretty hard cap on how high twitter shares will go now, which makes sense to me:

Yeah, unless another group counter-offers.
Makes selling calls above $55 interesting...

 

[mongo]

I wonder if buying Twitter shares now and then selling the $55 covered call as far out as possible is the best move?

Or call spreads like 45/55. Less at risk, 2x return.
With shares, could hedge with puts.
If deal falls through, puts/ put spreads may work.
Or bear call spreads 55/? On assumption of no rise above $55, but exposure if it does.
Not advice.

 

[Oil4AsphaultOnly]

Or call spreads like 45/55. Less at risk, 2x return.
With shares, could hedge with puts.
If deal falls through, puts/ put spreads may work.
Or bear call spreads 55/? On assumption of no rise above $55, but exposure if it does.
Not advice.

Hah! Thought the same thing! Did a 55/80 BCS.

 

[Question]

Musk tweeted: "Will endeavor to keep as many shareholders in privatized Twitter as allowed by law"

As a Twitter shareholder I'm interested if this means that I can keep my shares when going private? Anyone have knowledge how this works? How many shareholders law allows? How much twitter stock I have to have in order to get to that group who can keep their shares?

 

[willow_hiller]

Musk tweeted: "Will endeavor to keep as many shareholders in privatized Twitter as allowed by law"

As a Twitter shareholder I'm interested if this means that I can keep my shares when going private? Anyone have knowledge how this works? How many shareholders law allows? How much twitter stock I have to have in order to get to that group who can keep their shares?

In the TED interview, Elon estimated it would be limited to the 2,000 largest shareholders. It sounded like his strategy to take Twitter private without needing to increase his ownership more than necessary.

 

[adiggs]

Musk tweeted: "Will endeavor to keep as many shareholders in privatized Twitter as allowed by law"

As a Twitter shareholder I'm interested if this means that I can keep my shares when going private? Anyone have knowledge how this works? How many shareholders law allows? How much twitter stock I have to have in order to get to that group who can keep their shares?

This came up with the take-Tesla-private situation previously. The answer we seemed to come up with is "most likely not" (keep your Twitter shares).

There might be a mechanism to get individual current shareholders into a fund, where that fund is 1 of the shareholders of the new company. It's a mechanism that doesn't already exist, so it won't be easy. End result - most likely not

 

[Xepa777]

I’m also on the train of thought of selling 2024 $95 strike pits and those becoming worthless if it goes private. Is that not an absolute boon if that scenario happens?

 

[mongo]

I’m also on the train of thought of selling 2024 $95 strike pits and those becoming worthless if it goes private. Is that not an absolute boon if that scenario happens?

$95 puts would be ITM and need to be paid out at a loss of $40.80 a share.
Puts < $54.20 and calls > $54.20 would be OTM and exipre worthless.

 

[Oil4AsphaultOnly]

I’m also on the train of thought of selling 2024 $95 strike pits and those becoming worthless if it goes private. Is that not an absolute boon if that scenario happens?

In addition to Mongo's point, if the buyout does NOT go through and TWTR drops, your put options tie up cash and can be exercised at any point between now and 2024.

 

[MikeC]

Sold a couple each of 2024 $50 and $52.50 puts for $3.50-5.00 apiece. Seems like a done deal at this point.

 

[Oil4AsphaultOnly]

my Jun 17 55/80 BCS actually dropped in value despite TWTR increasing. Yeah, the market seems to think this is a done deal as well.

 

[MikeC]

It's done: Elon Musk to Acquire Twitter

 

[Xepa777]

Bought shares this morning and sold 2024 LEAPs at a $60 strike price lmfao. Free money baby.

 

[mongo]

It's done: Elon Musk to Acquire Twitter

Pending shareholder vote, regulator approval, and other customary closing conditions. Financing is secured though.

 

[RSpanner]

 

[MikeC]

It's trading again, puts < 52.50 and calls > 55 seem like free money at this point. Anything I'm missing?

 

[mongo]

It's trading again, puts < 52.50 and calls > 55 seem like free money at this point. Anything I'm missing?

On the put side, there is the chance the deal falls through. Call side is likely safe, but if they are covered calls, the underlying is at risk if the deal fails.
Not advice.

 

[pz1975]

I've bought a significant number of TWTR shares over the past week anticipating this deal (or an other offer higher than Elon's), and just sold Jan2024 $55calls against them for what should be an extra free $2/share.

 

[ZsoZso]

It's done: Elon Musk to Acquire Twitter

And now it is un-done:

Elon Musk notifies Twitter he is terminating deal

"Twitter has not complied with its contractual obligations," an attorney for Musk wrote.

www.cnbc.com