‘Elevated Risk This Deal Doesn’t Go Through’: Why Investors Are Beginning to Doubt Musk’s Blockbuster Bid for Twitter

https://fortune.com/2022/04/29/elevated-risk-musk-twitter-tsla-short-sellers/

Tim Pagliara, chief investment officer, CapWealth, a Franklin, Tenn.-based wealth management firm, reckons "run of the mill merger arbitrage" activity explains at least some of the poor performance we're seeing in TWTR in recent days. If there is a red flag, he says, it's in the $1 billion breakup fee built into the deal, which "is at the low end for a transaction of this size."

"If the breakup fee was $5 billion," he continues, "Twitter's stock price would likely be higher. The breakup fee itself says something about the likelihood of the deal getting done." Pagliara sees the puny divorce levy as a sign "there's not a high level of confidence that a deal will be able to pass the various hurdles ahead, including regulatory approval and Musk's further due diligence of Twitter."