Private equity could be prepared to offer much more to help snag Twitter away from the outstretched hands of billionaire Elon Musk.
A source familiar with the matter tells Yahoo Finance that Apollo Global Management (the parent company of Yahoo Finance) is weighing options to provide financing to potential suitors for a deal to take Twitter private. The private equity powerhouse isn’t planning to buy Twitter outright, the source says.
“When you talk about private equity, we think $60 to $65 in a bid is needed. That is $40 billion in equity financing in a check and $12 billion in debt to make it work,” Wells Fargo analyst Brian Fitzgerald said on Yahoo Finance Live, referring to a price for Twitter that would earn a good return for a private equity firm.
Musk has a 9.2% stake in Twitter, and offered to buy the social media platform for $54.20 a share last week. Musk believes the platform should be less reliant on advertising sales and better police its content, among other initial ideas from the unpredictable visionary.
Fitzgerald believes if Twitter’s board were to engage Musk, they could get his deal price lifted to the “high $50s.”
But as to be expected, Twitter is hardly welcoming the mercurial entrepreneur.
Twitter has since enacted a poison pill to keep Musk from acquiring more of the company.
And now Wall Street is growing concerned the buyout battle could hurt Twitter’s ad sales — and by extension its valuation — in the coming quarters.
Ad industry veteran Sir Martin Sorrell believes Twitter has a valuable audience, and may not be too weighed down by the battle with Musk. But the outcome is far from certain.
“Well, there are a couple of million followers on Twitter or users of Twitter, daily average users. So it’s an effective platform at a small scale. I doubt whether it will hinder it much in the short term. We’ll see what happens,” the S4 Capital founder said on Yahoo Finance Live.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Source: https://finance.yahoo.com/news/heres-how-much-private-equity-firms-could-pay-in-twitter-bidding-war-with-elon-musk-160040855.html