Tech

Elon Musk’s efforts to close Twitter transactions put pressure on CFO

Elon MuskBid to end the acquisition of

twitter Ltd.

Complicates the matter for Ned Segal, chief financial officer of a social media company that is fighting falling stock prices and rising costs.

Musk plans to abandon Twitter’s $ 44 billion transaction in April because the company didn’t provide the information needed to assess the amount of fake accounts on the platform on Friday. Said. Bret Taylor, chairman of the board, said Twitter was committed to completing the transaction and added that the company would pursue legal action to execute the transaction. Twitter issued a letter dated July 10 on Monday stating that efforts to revoke Mr. Musk’s transaction were a denial of his obligations under the merger agreement.

Justin Patterson, Managing Director of Key Banc Capital Markets Inc, an investment advisory services company, said:

The proceedings between Twitter and Mr. Musk will put more pressure on the company’s stock price. Twitter’s share has fallen by about 35% compared to the S & P 500’s drop of about 10% as social media companies have been working to soften the digital advertising market since the deal was signed in late April. ..

Twitter showed the worst performance on Monday’s S & P 500. The company’s share price closed at $ 32.65 on Monday, nearly 40% below the $ 54.20 per share price Mr. Musk agreed to pay.

The company said in April that total costs and expenses for the quarter ending March 31 were $ 1.33 billion, up 35% from the year-ago quarter. Advertising revenue was up 23% to $ 1.1 billion, according to analysts, but could be hit if the economic environment deteriorates.

Ned Segal, Chief Financial Officer of Twitter Inc.


Photo:

David Paul Morris / Bloomberg News

Former Seagull

Goldman Sachs Group Ltd.

Bankers who have been in charge of Twitter finance since 2017 recently took advantage of low funding costs to raise additional debt.The company said it had fired last week 30% of talent acquisition team After saying in May, it aims to suspend employment and reduce costs. Layoffs are expected to affect less than 100 people and are limited to talent acquisition teams, Twitter said.

Mr. Musk’s attempts to move away from the deal are not expected to adversely affect Twitter’s capital structure, said senior vice president Neil Vegley.

Moody’s Ltd.

Evaluation company.

The transaction is Twitter leverage could triple Add hundreds of millions of dollars of interest. Mr. Begley added that the company would be in a “better position” if the deal was canceled.

Twitter’s cash and cash equivalents fell from $ 4.25 billion in the year-ago quarter to $ 2.30 billion in the first quarter of this year. Short-term investment for the quarter fell 12.7% to about $ 4 billion, down from $ 4.55 billion a year ago. According to data provider S & P Global Market Intelligence, Twitter’s total debt at the end of the first quarter was about $ 6.62 billion, up from $ 5.54 billion at the end of 2021.

According to S & P, most of the debt is held in the form of convertible bonds and senior notes, and Twitter will not mature this year or next. Earlier this year, Twitter undertook approximately $ 2.43 billion in additional debt in the form of convertible bonds, according to S & P data.

Twitter’s BB + rating below investment eligibility remains negative for credit monitoring, and a potential lawsuit between the company and Mr. Musk adds uncertainty to the transaction, S & P Global Ratings said Thursday.

In addition to the freeze on recruitment, Twitter Number of exits It comes from senior managers, including Bruce Falk, General Manager of Revenues, and Kaibon Bakepool, General Manager of Consumer Business.

Mark Mahney, managing director of a banking advisory firm, said the recent upheaval could hurt employee morale and discourage employees from pursuing new transactions. He said it could reduce his income.

Evercore Ltd.

“All this uncertainty must be demoralizing. I’m sure they’re having a hard time making money when they’re likely to fall into an advertising recession,” he said. Said. “I think this must be a nightmare for the CFO.”

Mr. Musk and Mr. Seagull did not respond to requests for comment. Twitter declined to comment.

Write in Jennifer Williams-Alvarez jennifer.williams-alvarez@wsj.com

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Elon Musk’s efforts to close Twitter transactions put pressure on CFO

Source link Elon Musk’s efforts to close Twitter transactions put pressure on CFO

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