YesWe’re on the hook, Elon, so stop bleating about bots and stop speculating on a lower buyout price. When we agreed to an offer at $54.20 per share, in cash, you waived your right to do your due diligence. Look busy and do your best to close the deal, as you are legally obligated to do.
That wasn’t exactly the tone of Twitter’s board statement on Tuesday about how it’s “committed to closing the deal on the agreed-upon price and terms,” but it might as well be. After days of devious comments from Elon Musk, Twitter is trying to bring the script back to basics. A $44billion (£35billion) deal has been done and a bidder can’t speculate about putting it on hold while they take another look under the bonnet.
On the pure rights and wrongs of the standoff, sympathy lies entirely with Twitter. Once takeover terms are agreed, it doesn’t matter if the ratio of worthless bots – or fake accounts – on the social media site is less than 5% (as the company puts it) or a multiple of that figure. Musk had a chance to demand 5% proof before entering into a binding contract, but didn’t take it. Given that one of his big pre-auction brags 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 behavior is shameful.
However, it can also be effective. Twitter’s board will be left with a choice of only two unattractive options if Musk says he’s only willing to proceed at a lower offer price. The first would be to refuse to play ball and have the courts enforce the takeover agreement. This path involves a long battle and, almost certainly, another blow for a share price that has already crashed to its pre-bid level around the $37 mark. The second option would be to turn around and negotiate.
The guess here is that Twitter’s board would accept the humiliation of a renegotiation, mumble a few words about market volatility, and disguise a U-turn as an act of pragmatism. There would still be no guarantee of getting any terms, of course. But, as Neil Campling, head of technology research at Mirabaud, puts it, no new bidders are about to show up to save the day and “Musk knows he’s got all the cards in this game of poker.”
Rather, it is hoped that Twitter’s board tries to resist. Musk’s tactic is looking more and more like a cynical ploy to weaken his target before launching into the kill. The sport can be enjoyed – and Twitter’s board can probably be blamed for its naivety – but the simple premise at the heart of this saga is still worth defending. Bidders must honor their promises.
Vodafone’s challenge is to close deals quickly
The sentiment that Vodafone is a terrifyingly slow-moving big beast won’t change as long as chief executive Nick Read comes up with boring year-end summaries like this: “Our near-term operational and portfolio priorities remain unchanged from those reported six months ago,” he said alongside the full-year figures. The impulses did not run.
To be fair to Read, the operating figures within Vodafone’s ‘adjusted’ profits of 15.2 billion euros, up 5%, were correct. Profit margins were the best since 2009. In the UK, churn – the rate of customer departures – was the lowest ever. The only real flaw was Germany, where the operation appears to have been slow to adjust to a regulatory adjustment.
But investors’ attention these days is focused on these “portfolio priorities”, i.e. getting deals to streamline Vodafone’s empire and capitalize on the wave of telecoms consolidation in Europe. . On that front, Read pointed to “real opportunities in a number of markets,” but investors had already assumed that. The challenge is to land an opportunity.
Competition regulators are prowling the corporate dance floor, so no one can argue the negotiation is easy, but Read must know he’s under increasing pressure to deliver some form of reshuffle over the next 12 months. . A combo with Three in the UK is an obvious possibility, but the list of ideas goes through Spain, Italy, Portugal and possibly the Netherlands.
The arrival of Emirates Telecommunications Group as a nearly 10% shareholder probably doesn’t raise the pressure immediately since the public standing of the UAE-based group (for now) is kindly favourable. But the other 90% of investors also matter. They bought into the thesis that there is value to unlock at Vodafone, but a subdued share price remained stubbornly subdued.