(Bloomberg) — Elon Musk’s decision to revive his $44 billion buyout of Twitter Inc. is shockingly good news for investors including billionaire Carl Icahn who continued to bet on the outcome of the deal through months of uncertainty.
Most Read from Bloomberg
Musk Revives $44 Billion Twitter Bid, Aiming to Avoid Trial
Loretta Lynn, Coal Miner's Daughter And Country Queen, Dies
Elon Musk Sets Off Uproar in Ukraine by Tweeting His ‘Peace’ Plan
The Best Bar in the World Is Hidden Behind a Barcelona Pastrami Shop
Mar-a-Lago Documents Included Pardons, Emails, Legal Bills
After Musk and Twitter agreed to proceed with the deal at the original offer price at $54.20 a share on Tuesday, the social media company’s stock rallied as much as 23%, pushing the spread to its narrowest level since the pair entered a merger pact back in April. Shares of the company slipped 0.4% in premarket trading on Wednesday.
Tuesday was a “great day for arbs,” said Julian Klymochko, chief executive officer of Accelerate Financial Technologies. The saga closing in Twitter’s favor demonstrates the strength of definitive merger agreements and contract law, said Klymochko, who runs a merger-arbitrage investment fund.
Arbitrage traders make money by betting on merger agreements, with the potential for millions of dollars in profits if the deals go through. Now, all that’s left is to wait for the agreement to close.
Icahn capitalized on the dispute, according to people familiar with the matter. He acquired a roughly $500 million stake in the mid-$30-a-share range, the people said, asking not to be identified because the matter is private.
The veteran investor purchased the stake under the belief that Musk wouldn’t be able to get out of the deal, and the assumption that the value of the stock was in the range of roughly the mid-$30s a share, making the downside risk if Musk won the trial minimal, they added.
As a result, Icahn made roughly $250 million after the run up in the company’s stock. A representative for Icahn declined to comment. His stake was reported earlier by the Wall Street Journal.
The contentious deal has sent Twitter’s stock on a rollercoaster ride in recent months. It surged as high as $54.57 in April as the deal appeared to be moving to closure, and as low as $32.52 in July after Musk sent a termination letter in an attempt to back away from the buyout proposal. The stock rebounded again last month as a judge heard arguments in Twitter’s lawsuit aimed at forcing Musk to complete the transaction.
“For arb traders, it’s overall a good outcome,” said Aaron Glick, a merger arbitrage specialist at Cowen & Co., which makes markets and is long common stock and equity options in Twitter.
(Updates with premarket trading.)
Most Read from Bloomberg Businessweek
Millions in Cryptocurrency Vanished as Agents Watched Helplessly
Pfizer Needs to Prove It’s Ready to Move On From Covid-19
Maine Lobster Union Points the Way for Organizing Gig Economy Workers
Big Pharma Is Chasing a $55 Billion Prize of Safer Blood Thinners
Facebook Is the Only Game in Town for Digital Political Ads
©2022 Bloomberg L.P.
Related Quotes
It's an eventful and crazy week that the richest man in the world has just experienced. Indeed, the events that Musk has just experienced are at the height of his influence. To one of his fans and admirers who told him on the evening of October 6 to take care of his health after having recapitulated his news of the last seven days, Musk ended up recognizing that it had been a little too much.
Intel (NASDAQ: INTC) has been under tremendous pressure this year. Shares of the semiconductor company have tumbled about 50%. While Intel is facing its share of headwinds, I believe better days lie ahead for the tech giant and its big-time dividend.
Tax-loss harvesting has risen in popularity. BofA says the strategy could give a boost to underperforming stocks from November to January.
The year 2022 has been a painful journey for semiconductor manufacturers. Following the example of AMD , Nvidia and Intel , which are the three main players in the sector, 2022 is a year to forget .Their valuations are in recession. Advanced Micro Devices (AMD) currently has a market value of $94.4 billion, which is a decrease of at least $83 billion compared to December 31, 2021.
Oil prices have bounced around quite a bit this year. Brent oil, the global-pricing benchmark, started 2022 below $80 a barrel before soaring into the $120s following Russia's invasion of Ukraine. With the prospect of higher oil prices, we asked some of our energy contributors what oil stocks they believe are best positioned to capitalize following OPEC's bold move.
(Bloomberg) — The conventional wisdom with stock bulls is that prices will take off when the Federal Reserve wins its fight against inflation. But the end of surging consumer costs could unleash another round of bad news.Most Read from BloombergRussia Races to Reopen Crimea Bridge Damaged in Fiery BlastPutin Orders Sakhalin-1 Project Transferred to Russian EntityMinecraft Star Dream Meets His Screaming Fans for First TimeWall Street Is Missing the Risk to Stocks If Inflation Is BeatenFacebook I
These companies have the fuel to continue piping income into their investors' pockets in the coming years.
You would think this would be TIPS’ time to shine. Instead, the prices of Treasury inflation-protected securities—government bonds that are adjusted to keep up with inflation—have declined this year, even as inflation has soared. The comparable loss for ICE’s index of regular Treasury bonds was 13.5%.
Tesla stock is forming a bearish head-and-shoulders pattern. And with CEO Elon Musk likely selling more stock to fund his Twitter purchase, shares of the electric-vehicle giant might have further to fall.
NIO Inc. stock is trending on the Yahoo Finance Platform. Here is a visualization of $NIO performance over time, how that performance compares to the wider industry, and analyst projections for the current quarter.Check out the ticker page here.
For the retail investor, the only certainty of our current market environment is uncertainty. Volatility is up, and the main indexes are showing deepening losses. As if that wasn't enough, at least one market bull is turning a bit more pessimistic. JPMorgan strategist Marko Kolanovic has been one of the more bullish voices on Wall Street in recent months, but current conditions have him pushing the timeline back. While he still believes that the S&P 500 can hit 4,800, or a 32% gain from current
If you buy one between now and the end of October, you’ll earn a composite interest rate of 9.62%.
Wall Street tends to give stock splits more weight than they should have. Annaly's reverse split, however, might be a genuine warning sign.
Formerly one of the top pandemic-era stocks, Shopify (NYSE: SHOP) has fallen from its pedestal. As a result, I think Shopify has plenty of potential for investors, although it may be years before it can reclaim its all-time high. Shopify's drop was caused by its evaporating growth and profitability.
High-yield dividend stocks can be powerful wealth-building tools. Three stocks that fit this definition today are Valero Energy (NYSE: VLO), Verizon Communications (NYSE: VZ), and Tanger Factory Outlet Centers (NYSE: SKT). Over the past decade, only a few oil and natural gas companies have beaten the S&P 500 on a total return basis.
Investing in Warren Buffett's biggest holdings can be a winning tactic, but don't overlook the companies that occupy smaller positions in Berkshire Hathaway's portfolio.
“The Fed will have no choice but to reliquefy the system,'' an event that is likely to happen by the end of the World Series, Minerd writes on Thursday.
The 30 components of the Dow Jones Industrial Average (DJIA) tend to be industry-leading companies that are meant to provide a representation of the broader economy. Honeywell (NASDAQ: HON), Intel (NASDAQ: INTC), and Chevron (NYSE: CVX) stand out as three reliable Dow stocks to buy in October and hold for decades.
The company is reaping benefits from investments in 5G technology, but that's not necessarily enough to make AT&T stock a buy.
While most people should sit tight, there are some scenarios where reducing your stock allocation makes sense.