Hedge fund Elliott sold Twitter stake before Elon Musk backed away from deal

The activist hedge fund Elliott Management sold its entire equity stake in Twitter in the second quarter, a period during which the social media company’s shares rallied dramatically after agreeing to a $44bn takeover by Elon Musk in April.

A securities filing on Monday showed that Elliott had no common stock in Twitter as of June 30, down from 10mn shares that were worth $387mn on March 31.

Tesla chief executive Musk offered to buy Twitter at $54.20 a share in cash on April 14, a deal agreed by the company less than two weeks later.

Elliott declined to comment on when it sold the stock. Twitter’s share price rose as high as $51.70 in late April before falling to $37.39 on June 30, after Musk had tried to walk away from the deal. Twitter shares closed on Monday at $44.50.

The $56bn hedge fund founded by billionaire Paul Singer, which had been silent about Musk’s takeover bid, played a role in steering Twitter’s direction and leadership before exiting its position.

In early 2020, Elliott built a large stake in Twitter and participated alongside private equity firm Silver Lake in a $1bn convertible debt offering that the social media company used to repurchase shares.

Jesse Cohn, a partner at Elliott who oversees the firm’s technology investments, joined Twitter’s board alongside Silver Lake co-chief executive Egon Durban. As part of their investment, Elliott and Silver Lake helped set up succession plans for Twitter co-founder and chief executive Jack Dorsey.

In June 2021, Cohn stepped down from Twitter’s board of directors, while Silver Lake’s Durban maintained his seat. Elliott remained a large shareholder, supporting the company’s naming of Parag Agrawal to replace Dorsey last November.

In July, Musk said he was ending his bid for Twitter and accused the company of disclosing “false and misleading” information about the number of fake and spam accounts on the social network. Twitter sued Musk to enforce the deal. A trial is set to take place in a Delaware court in October.

Filings indicated that Elliott also cut his other exposure to Twitter.

Elliott held call options on 2mn Twitter shares and 50mn in shares underlying its convertible bond position, as of the end of the first quarter. The filings showed that Elliot continued to hold 40mm in the shares of its convertible bond position, but no call options, as of June 30.

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