Elon Musk either didn’t get very good corporate finance advice when he decided to buy Twitter (TWTR) or, more likely, moved too quickly and ignored any advice he was given because he now finds himself backed into a corner. As I wrote in the September issue of The Credit Strategist, Musk should structure the deal very differently than a cash purchase of TWTR. Instead, he would be much better served using his Tesla, Inc. (TSLA) stock as acquisition currency or even having TSLA itself buy TWTR in a stock-for-stock merger. Without repeating at length what I wrote before (subscribers can return to the September issue), TWTR is a key component of Musk’s brand and success as well as TSLA’s market cap (which I view as unfounded and unsustainable but that is a story for another day). Combining TWTR and TSLA is not as outlandish as it sounds and may in fact be where Musk ends up for a host of reasons both strategic and financial.
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