Elon Musk’s twitter account is seen through the Twitter logo in this illustration taken, April 25, 2022. REUTERS/Dado Ruvic/Illustration Register now for FREE unlimited access to Reuters.comNEW YORK, April 25 (Reuters) – Twitter Inc (TWTR.N) is poised to agree a sale to Elon Musk for around $43 billion in cash, the price the CEO of Tesla has called his “best and final” offer for the social media company, people familiar with the matter said.Twitter may announce the $54.20-per-share deal later on Monday once its board has met to recommend the transaction to Twitter shareholders, the sources said, adding it was still possible the deal could collapse at the last minute.Musk, the world’s richest person according to Forbes, is negotiating to buy Twitter in a personal capacity and Tesla (TSLA.O) is not involved in the deal.Register now for FREE unlimited access to Reuters.comTwitter has not been able to secure so far a ‘go-shop’ provision under its agreement with Musk that would allow it to solicit other bids once the deal is signed, the sources said. Still, Twitter would be allowed to accept an offer from another party by paying Musk a break-up fee, the sources added.The sources requested anonymity because the matter is confidential. Twitter and Musk did not immediately respond to requests for comment.Twitter shares were up 4.5% in pre-market trading in New York at $51.15.Musk, a prolific Twitter user, has said it needs to be taken private to grow and become a genuine platform for free speech.The 50-year-old entrepreneur, who is also CEO of rocket developer SpaceX, has said he wants to combat trolls on Twitter and proposed changes to the Twitter Blue premium subscription service, including slashing its price and banning advertising.The billionaire, a vocal advocate of cryptocurrencies, has also suggested adding dogecoin as a payment option on Twitter.He has said Twitter’s current leadership team is incapable of getting the company’s stock to his offer price on its own, but stopped short of saying it needs to be replaced.”The company will neither thrive nor serve this societal imperative in its current form,” Musk said in his offer letter last week.Up to the point Musk disclosed a stake in Twitter in April, the company’s shares had fallen about 10% since Parag Agrawal took over as CEO from founder Jack Dorsey in late November.The deal, if it happens, would come just four days after Musk unveiled a financing package to back the acquisition.This led Twitter’s board to take his offer more seriously and many shareholders to ask the company not to let the opportunity for a deal slip away, Reuters reported on Sunday. Before Musk revealed the financing package, Twitter’s board was expected to reject the bid, sources had said. read more The sale would represent an admission by Twitter that Agrawal is not making enough traction in making the company more profitable, despite being on track to meet ambitious financial goals the company set for 2023. Twitter’s shares were trading higher than Musk’s offer price as recently as November.Musk unveiled his intention to buy Twitter on April 14 and take it private via a financing package comprised of equity and debt. Wall Street’s biggest lenders, except those advising Twitter, have all committed to provide debt financing.Musk’s negotiating tactics – making one offer and sticking with it – resembles how another billionaire, Warren Buffett, negotiates acquisitions. Musk did not provide any financing details when he first disclosed his offer for Twitter, making the market skeptical about its prospects.Register now for FREE unlimited access to Reuters.comReporting by Greg Roumeliotis in New York, additional reporting by Krystal Hu;
Editing by Mark PotterOur Standards: The Thomson Reuters Trust Principles. .
Reuters GraphicsOn Tuesday, stocks shrugged off the rise in yields, with the S&P 500 ending up 1.6% on the day. Still, the S&P 500 is down 6.4% this year, while the yield on the 10-year TIPS has climbed more than 100 basis points.”Real 10-year yields are the risk-free alternative to owning stocks,” said Barry Bannister, chief equity strategist at Stifel. “As real yield rises, at the margin it makes stocks less attractive.”One key factor influenced by yields is the equity risk premium, which measures how much investors expect to be compensated for owning stocks over government bonds.Rising yields have helped result in the measure standing at its lowest level since 2010, Truist Advisory Services said in a note last week.
Reuters GraphicsHEADWIND TO GROWTH SHARESHigher yields in particular dull the allure of companies in technology and other high-growth sectors, with those companies’ cash flows often more weighted in the future and diminished when discounted at higher rates.That may be bad news for the broader market. The heavy presence of tech and other growth stocks in the S&P 500 means the index’s overall expected dividends are weighted in the future at close to their highest level ever, according to BofA Global Research. Five massive, high-growth stocks, for example, now make up 22% of the weight of the S&P 500.At the same time, growth shares in recent years have been highly linked to the movement of real yields.Since 2018, a ratio comparing the performance of the Russell 1000 growth index (.RLG) to its counterpart for value stocks (.RLV) – whose cash flows are more near-term – has had a negative 96% correlation with 10-year real rates, meaning they tend to move in opposite directions from growth stocks, according to Ohsung Kwon, a U.S. equity strategist at BofA Global Research.Rising yields are “a bigger headwind to equities than (they have) been in history,” he said.
Top five stocks market cap as percentage of S&P 500Bannister estimates the S&P 500 could retest its lows of the year, which included a drop in March of 13% from the index’s record high, should the yield on the 10-year TIPS rise to 0.75% and the earnings outlook – a key component of the risk premium – remain unchanged.Lofty valuations also make stocks vulnerable if yields continue rising. Though the tumble in stocks has moderated valuations this year, the S&P 500 still trades at about 19 times forward earnings estimates, compared with a long-term average of 15.5, according to Refinitiv Datastream.“Valuations aren’t great on stocks right now. That means that capital may look at other alternatives to stocks as they become more competitive,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.Still, some investors believe stocks can survive just fine with rising real yields, for now. Real yields were mostly in positive territory over the past decade and ranged as high as 1.17% while the S&P 500 has climbed over 200%.JPMorgan strategists earlier this month estimated that equities could cope with 200 basis points of real yield increases. They advised clients maintain a large equity versus bond overweight.”If bond yield rises continue, they could eventually become a problem for equities,” the bank’s strategists said. “But we believe current real bond yields at around zero are not high enough to materially challenge equities.”Register now for FREE unlimited access to Reuters.com
Atlantia’s share performanceEdizione and Blackstone want to delist Atlantia to shield it from the appetite of rival suitors, who approached the Benettons last month with a proposal to buy the group and hand over Atlantia’s motorway concessions to Perez.GIP, Brookfield and the Spanish tycoon are in a ‘wait and see’ mode after the Benetton family and Atlantia’s long-time investors CRT and GIC rebuffed their offer, sources have said.The takeover offer comes as Atlantia prepares to pocket 8 billion euros from the sale of the group’s Italian motorway unit, a deal aimed at ending a political dispute triggered by the 2018 collapse of a motorway bridge.It also puts the spotlight on Alessandro Benetton, 58, who was appointed chairman of Edizione earlier this year, tightening the family’s grip on its investments.After parting ways with its Autostrade per l’Italia, Atlantia will continue to run airports in Italy and France, motorways in Europe and Latin America and digital toll payment company Telepass.The Italian government so far has been silent on the latest developments, but it has special vetting ‘golden’ powers over strategic assets, such as the country’s airports and their ownership.($1 = 0.9184 euro)Register now for FREE unlimited access to Reuters.com
