Earlier this year, Tesla founder Musk stated he joined the board of Twitter and was looking to acquire it for $61 billion, something Forager described as undervaluing the company.
However, it had since backtracked on that decision and Twitter had taken steps to commence legal action against Musk for rescinding on the agreement and to force closure of the deal at the agreed price.
Shares in the social media, which peaked at US$51 (A$75.5) in April, had since fallen to US$32 and were down 14% in the past five days to 11 July.
Forager co-portfolio manager, Gareth Brown, said: “Surely nobody is any longer under the misapprehension that Musk can just pay a $1 billion break fee and walk away? He waived away his due diligence rights, signed a contract and then changed his mind after the stockmarket tanked. Elon might currently be “walking away” from the deal, but he’s about to be dragged back to the table
“The cult of Musk has allowed him to skirt and renegotiate a lot of rules that apply to the rest of us, from Occupational Health and Safety regulations to Securities Laws. But this is a matter of contract law now, in a country that hold contracts sacrosanct, in front of a judge in a state not know to be friendly to acquirers with cold feet.”
The biggest risk now, Brown said, was that the board would agree to a reduced price in order to quickly close the deal.
“We’ve spent a lot of time criticising the Twitter board in the past, but they can’t be faulted here. They’ve held their ground and ignored Musk’s theatrics, while pushing to close the deal. As shareholders, we hope to see that continue and think we’ll have some concrete answers here in as soon as a few months.”
