Uncertainty Musk Twitter deal will close as platform reports mixed earnings

Twitter reported mixed results in what is expected to be one of its final earnings reports before it is taken private by Elon Musk

Twitter reported mixed results in what is expected to be one of its final earnings reports before it is taken private by Elon Musk

Twitter shares climbed Thursday after reporting mixed earnings, but continued to lag the price in the company's takeover agreement with Elon Musk amid uncertainty over whether the acquisition will be completed.

Near 1850 GMT, shares in the microblogging company stood at $49.18, up 1.1 percent from Wednesday, but well below the $54.20 price in the agreement between Twitter and Musk.

Scott Kessler, analyst at Third Bridge, said the gap between Twitter's stock price and that in the agreement reflected lingering questions surrounding the takeover agreement, which is expected to close later this year.

"What we've seen in the past month came together so quickly and so unexpectedly that people are bracing themselves for the possibility that the deal might not close."

In its earnings Thursday, Twitter said the Musk transaction "is expected to close in 2022" following "customary closing conditions."

But some prominent voices have expressed doubts the deal will be completed for a variety of reason, including questions about the financing and concerns that Twitter would distract Musk from running Tesla. Musk is also an iconoclast in corporate America known for his unpredictability. 

Musk's financing plan includes a $13 billion debt facility from a financing consortium led by Morgan Stanley, and a separate $12.5 billion margin loan from the same bank, as well as $21 billion from Musk's personal fortune.

But Musk has not specified how he will raise the cash for his portion. While listed as the world's richest person by Forbes, Musk's wealth is believed to be largely from Tesla stock, meaning he would likely have to sell billions of dollars of the electric car maker to finance the package.

The breakup fee for the deal is $1 billion.

The micro-blogging platform reported profits of $513.3 million in the first quarter of 2022, more than seven times the year-ago level following a one-time gain from a divestiture. Revenues rose 16 percent to $1.2 billion, a bit below the $1.22 billion expected by analysts.

In the wake of the deal, Twitter canceled its quarterly earnings conference call with analysts.

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