- David Einhorn’s Greenlight Capital builds stake at $37.24 average
- Hedge fund manager sees odds stacked in platform’s favour
- Twitter and Musk will face off in court in October
Hedge fund Greenlight Capital said it took a new stake in Twitter (TWTR:NYSE) last month as the social media company launched a lawsuit to force the billionaire entrepreneur to make good on his takeover offer.
Musk abandoned his $44 billion buyout of Twitter last month, having changed his mind about the deal.
Greenlight founder Einhorn wrote to investors on Monday that his hedge fund had taken the position, paying an average $37.24 for the stock, according to the letter seen by Reuters.
‘At this price there is a $17 per share of upside if Twitter prevails in court and we believe about $17 per share of downside, if the deal breaks,’ Einhorn told investors.’
‘We are getting 50-50 odds on something that should happen 95%+ of the time,’ the letter claimed.
LEGAL PRECEDENT SET
Over the years, the court in Delaware has developed case law relating to merger agreements, and the ‘resulting precedent and clear understanding of buyers’ contractual obligations has created a great deal of predictability in this sphere,’ Einhorn wrote.
Einhorn argues that the Delaware Court, the most prominent business court in the US, has reason to force Musk to complete the purchase. ‘If it lets Musk off the hook, it will invite many future buyers’ remorse suits,’ he said.
Traders have been won over by Greenlight’s optimism in their droves, driving Twitter’s share price 25% up in less than a month. The stock is seen opening later today at around $40.83, still 25% below Musk’s original $54.20 buyout offer.
