Twitter’s board deserves credit for Elon Musk’s U-turn

Buying Twitter “is an accelerant to creating X, the everything app”, said Elon Musk by way of a non-explanation of why he was now prepared to do the deal he was desperately trying to escape. One must conclude he judged his legal case to be doomed before it had even reached a Delaware courtroom.

That assumes, of course, that the latest plot-twist is not another wheeze to play for time. Twitter’s board sensibly signalled it wanted to nail down every detail of Musk’s latest offer to proceed on April’s agreed $44bn (£39bn) terms. Quite right: don’t leave an inch of wriggle room.

But, if this is the end of the saga, the right side has won the dispute. Musk’s bleats about fake bots may or may not have had substance, but they became irrelevant once he committed to pay $54.20 a share for Twitter. At that point, it was up to him to prove that a “material adverse change” had occurred – a test where courts have rightly applied a high hurdle in the past. Few legal experts could see how the claim could possibly stack up.

Given what’s happened to tech and social media companies’ valuations since April, Musk is probably paying at least twice what a standalone Twitter is worth. That’s life. Deals are struck at a moment in time. The same applies to the banks who provided financing for the adventure and may now struggle to off-load the debt on to other investors at April’s prices. Nobody forced them to volunteer.

Twitter’s board deserves credit for sticking to its guns. It was given the runaround by Musk in the early weeks, but now looks set to deliver the result it promised its shareholders. In the process, it has defended the excellent principle that bidders should do what they’ve agreed to do. Whether Musk will be a good owner of Twitter is an entirely different matter. But the next billionaire with a bad case of buyer’s remorse will find it harder to flee; that is definitely welcome.

BoE intervention has worked … for now

Was it the prime minister’s dull “growth, growth, growth” speech that caused sterling to fall by a cent against the dollar on Wednesday? Or was it more a case of the US currency being strong against everything? Probably a bit of both.

Either way, it was a reminder that financial markets are not in a mood to relax and simply wait for the chancellor to reveal his fiscal plan. Over in the gilt market, the yield on 30-year government debt rose to 4.2%. That figure is a lot better than the 5% seen during last week’s meltdown that prompted the Bank of England to intervene, but it was an increase from 4% on the day.

The Bank’s operation, incidentally, has been a success so far: Threadneedle Street has spent only £3.7bn over the first six days of a 13-day programme that allowed daily purchases of up to £5bn. Wednesday was the second day in a row in which it accepted no bids in the auction.

The open question, though, has always been what happens when the Bank judges that orderly conditions have been restored and steps back. The answer remains deeply unclear and the chancellor’s big reveal – still, he says, due on 23 November – feels a very long way off.

Worse places for investors to hide than Tesco’s

Tesco’s downwards tweak to this year’s retail profits forecast – the outcome is now predicted to be at the lower end of the previously advertised £2.4bn-to-£2.6bn range – clearly does not represent cheerful news for shareholders. That is especially so when chief executive Ken Murphy is talking about “significant” cost inflation, “ongoing challenges in the market” and consumer uncertainty.

But one could equally say that a 10% fall in first-half operating profits could have been worse. Nobody gets a free pass in retail-land these days, but the country’s biggest supermarket chain still comes with defensive qualities. Pure size and buying clout is the best protection against the encroachment of the discounters and there are always cost savings to be found – another £500m is the target this year.

The basic rate of pay for shop-floor staff is being nudged higher for the third time in 13 months, and shareholders get an improved dividend. Juggling these various “stakeholder” interests, as Murphy puts it, is clearly trickier than usual, but the show rolls on. The shares have derated by a quarter since August and now sport a dividend yield of 5%. On the tentative assumption that the energy crisis won’t last for ever, there are worse places for investors to hide.