Market Sees 60% Chance Elon Musk’s Twitter Deal Makes Oct. 28 Deadline, Cowen Says

Market is pricing in just a bit more than the odds of a coin toss that Elon Musk’s Twitter deal will close by Oct. 28.

Elon Musk’s deal with Twitter Inc. to close by October 28! (REUTERS)

The market is pricing in just a bit more than the odds of a coin toss that Elon Musk's deal with Twitter Inc. will close by Oct. 28, a court-issued deadline. That's the calculation from Aaron Glick, a merger arbitrage strategist at Cowen Inc.

“Based on my informal survey last week, arbitrage traders tend to think Twitter's price holds up well if we are going back to court,” Glick said. “The average guess of where Twitter trades if the deal is not consummated came out to around $45.”

With Twitter shares trading Monday at around $50.50, that near-term downside assumption puts the deal's October closing probability at roughly 60%, he said, which is up from less than 50% as of Friday's close. Cowen makes markets in, and is long equity options in, Twitter.

Twitter shares are up 2.8% Monday and on pace to snap a three-day losing streak, after Bloomberg News reported that Musk appears to be running out of ways to evade his original $44 billion contract to buy the social media company. The stock has been trading at a more than 9% discount to the $54.20 offer price over the past few days, as funding uncertainties keep investors on edge about the deal's outcome and timing.

Last week, a Delaware judge said that if the transaction isn't done by Oct. 28, she will set a new trial date for Twitter and Musk in November.

©2022 Bloomberg L.P.