Resolves YES if a deal for Elon Musk to buy Twitter closes by October 31, 2022, otherwise NO.
Background:
https://www.nytimes.com/2022/10/04/technology/elon-musk-twitter-deal.html
Chancellor Kathaleen St. Jude McCormick, head of the Delaware Chancery Court, said Thursday that Musk and Twitter now have until Oct. 28 to close the deal. A trial originally set for Oct. 17 will happen in November if they don’t, she said.
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https://www.washingtonpost.com/technology/2022/10/27/twitter-elon-musk/ "Elon Musk took control of Twitter late Thursday as his $44 billion deal to takeover the company closed."
Matt Levine writes Musk Will Buy Twitter at the Last Minute
Is this deal going to close on Thursday? Oh no, no no no. He’s got until 5 p.m. on Friday. A plausible time to close would be 4:45 on Friday, possibly 4:20. Really 5:30 is not entirely off the table
Here's a market on it:
"Earlier, Musk changed his description on the social media service, where he has more than 110 million followers, to “Chief Twit.”"
@jack I only wish I had an emoji of someone pulling their shirt collar away from their neck to represent my position 😂
Going in a bit harder on my "No" position for this one. My assumptions are a bit baseless and mainly factor in the amount of work it took a friend of mine to try and sell his start-up. It was > 6 months of effort and it that didn't involve anything near the scale of Twitter.
Actually, after writing this out, I'd say my assumptions are totally baseless, but ~8 days to assume control from now? I'll believe it when I see it.
@SamuelRichardson They've been working on closing this merger for months, although with a very significant period in the middle where Musk was trying to get it terminated instead. I guess a big question will be where they were in the process when Musk stopped cooperating on closing the deal, and how much work remains. Musk's bankers seem to be expressing confidence in the timeline though.
The work is always due diligence and the merger agreement.
Actual closing is near-trivial.
Getting all the dispersed equity contributions is the only remotely material task, unless the banks or gov’t do something wild.
My guess would be the dream-team of midwit staffers putting out CIFUS rumors might start to realize that only Putin, Xi, and Elon are even capable of getting humans to space (and that the “foreign” sources of equity are the same ones who own much of the US markets as-is…)
@Gigacasting Haha. Written like someone who's never been a junior associate at a firm closing a giant deal :)
https://www.bloomberg.com/news/articles/2022-10-21/us-weighs-security-reviews-for-musk-deals-including-twitter-buy "Twitter Tumbles as US Weighs Security Reviews for Musk Deals"
https://www.bloomberg.com/news/articles/2022-10-21/twitter-musk-talks-warm-up-as-buyout-closing-deadline-nears#xj4y7vzkg "Advisers to Twitter Inc. and Elon Musk are hard at work trying to get the $44 billion deal closed by the end of the month, according to people familiar with the matter."
“So, as of this writing, the market believes that there is a 43% chance Musk will go through with the sale by Nov 4th 2022.” https://www.countbayesie.com/blog/2022/10/19/what-is-the-probability-elon-musk-will-buy-twitter-using-the-volatility-smile-to-infer-market-probability-distributions
@DavidAtkinson Thanks for this link. It is doing some analysis of implied volatilities to arrive at this estimated probability.
But If I just look at the options directly today https://finance.yahoo.com/quote/TWTR/options?date=1666915200, calls expiring 10/28 are priced at 0.11 for a 54 strike and 0.77 for a 53 strike. You could buy this spread (i.e. buy a 53 strike call and sell a 54 strike call) for 0.77 - 0.11 = 0.66. This spread is worth 0 if the twitter price stays <53, 1 if it goes >54, and x-53 if it's in between. So this (66%) is roughly the probability that twitter goes above 53 or 54 by 10/28, which would happen if the deal closes or the market believes it is almost certain to close. (Also note that if any market participant disagreed with this probability, they could either buy or sell the spread.)
This is substantially different than the 43% the article got, and I believe my direct reading of the option prices more than the implied volatility analysis.
Here's another analysis from the options prices. The $54 strike options will pay out $0.20 if the deal closes before expiry, and pay out x-$54 if the price goes above $54 (which would imply something like a 99% chance that the deal will close). Right now for 10/28 expiry they are priced at 0.14 implying 0.14/0.2 = 70% chance, and for 11/4 expiry priced at 0.19 implying .19/.2 = 95% chance.
