You’re on the hook, Elon, so stop bleating about bots and cease speculating about a lower takeover price. When we agreed a bid at $54.20 a share, in cash, you waived your right to conduct due diligence. Look busy and use your best efforts to get the deal over the line, as you’re legally obliged to do.
That wasn’t exactly the tone of the board of Twitter’s statement on Tuesday about how it is “committed to completing the transaction on the agreed price and terms”, but may as well have been. After days of diverting comments by Elon Musk, Twitter is trying to bring the script back to basics. A $44bn (£35bn) deal has been agreed and a bidder can’t speculate about putting it “on hold” while he takes another look under the bonnet.
On the pure rights and wrongs of the standoff, sympathy lies entirely with Twitter. Once takeover terms have been agreed, it shouldn’t matter if the ratio of worthless bots – or fake accounts – on the social media site is under 5% (as the company says) or a multiple of that figure. Musk had his chance to demand proof of 5% before he entered a binding contract, but didn’t take it. Since one of his big pre-bid boasts was about how he would weed out spam content and restore Twitter to real users, he can’t claim he was unaware of the debate around the accuracy of Twitter’s measurement system. His behaviour is disgraceful.
It may also be effective, however. Twitter’s board will find itself with a choice of only two unattractive options if Musk says he’s only prepared to proceed at a lower bid price. The first would be to refuse to play ball and ask the courts to enforce the takeover agreement. That path involves a long battle and, almost certainly, another whack to a share price that has already collapsed to its pre-bid level around the $37 mark. The second option would be to roll over and negotiate.
The guess here is that Twitter’s board would accept the humiliation of renegotiation, mutter a few words about market volatility and dress up a U-turn as an act of pragmatism. There’d still be no guarantee of securing terms, of course. But, as Neil Campling, head of technology research at Mirabaud says, no new bidder is about to turn up to save the day and “Musk knows he holds all the cards in this game of poker”.
One rather hopes, though, that Twitter’s board tries to tough it out. Musk’s tactics look increasingly like a cynical ploy to enfeeble his target before moving in for the kill. We can enjoy the sport – and Twitter’s board can probably be blamed for being naive – but the simple principle at the heart of this saga is still worth defending. Bidders should honour their promises.
The Vodafone challenge is to land deals, fast
The sense that Vodafone is a big beast that moves terribly slowly won’t shift as long as the chief executive, Nick Read, offers end-of-year summaries as dull as this: “Our near-term operational and portfolio priorities remain unchanged from those communicated six months ago,” he declared alongside full-year numbers. Pulses did not race.
To be fair to Read, the operational numbers within Vodafone’s “adjusted” earnings of €15.2bn, up 5%, were OK. Profit margins were the best since 2009. In the UK the rate of churn – the ratio of departing customers – was the lowest ever. The only real blemish was Germany, where the operation seems to have been slow to adapt to a regulatory tweak.
But the investor focus these days is concentrated on those “portfolio priorities”, meaning deal-making to make Vodafone’s empire simpler and to capitalise on the telecoms consolidation wave in Europe. On that front, Read reported “live opportunities in a number of markets”, but investors had assumed as much already. The challenge is landing an opportunity.
Competition regulators prowl the corporate dancefloor, so nobody can pretend deal-doing is easy, but Read must know he is under increasing pressure to deliver some form of shake-up in the next 12 months. A combo with Three in the UK is an obvious possibility, but the list of ideas runs through Spain, Italy, Portugal and possibly the Netherlands.
The arrival of Emirates Telecommunications Group as a near-10% shareholder probably doesn’t turn up the heat immediately since the UAE-based group’s public position (for now) is sweetly supportive. But the other 90% of investors also matter. They’ve bought the thesis that there’s value to be unlocked at Vodafone but a becalmed share price remained stubbornly becalmed.