Bid for Twitter: Elon Musk's Buffett-like playbook may not work

“My offer is my best and final offer.” Elon Musk’s $43 billion bid for Twitter takes a page out of Warren Buffett’s take-it-or-leave-it playbook. But investment bankers, investors and analysts said he needed a blowout bid and more details on his financing for this strategy to work. They added Musk’s track record of reversing his positions also weighs against him.

Buffett is known for clinching large deals through his conglomerate Berkshire Hathaway, such as the $11.6-billion deal to buy property and casualty reinsurer Alleghany and his $37 billion acquisition of aerospace equipment maker Precision Castparts, by making only one offer and refusing to negotiate.

These offers were viewed as fair by their acquisition targets and were backed by committed financing from Berkshire Hathaway. Musk’s bid, on the other hand, was deemed too low by the market and too thin on financing details.

 

In 2018, Musk, who is the CEO and a co-founder of luxury electric carmaker Tesla, tweeted that there was “funding secured” for a $72 billion deal to take Tesla private but did not move ahead with an offer. He and Tesla each paid $20 million in civil fines, and Musk stepped down as Tesla's chairman to resolve U.S. Securities and Exchange Commission claims that he defrauded investors.

“Warren has demonstrated over 40 acquisitions in 60 years that when he says something, he does it. His word has enormous value. With Elon, I wouldn't trust him, ... there's no reliability there” said Lawrence Cunningham, a law professor at George Washington University who has written extensively on Buffett. Musk and Buffett did not respond to requests for comment.