Traders are the most skeptical they’ve ever been about whether Elon Musk will actually complete his proposed purchase of Twitter Inc.
The spread on the deal, which offers an indication of how much Wall Street believes the takeover will be completed, jumped to $6.94 on Tuesday – the widest since the billionaire launched his bid and almost twice where it was last week when he announced a roughly $7.1 billion financing commitment.
Twitter shares ended Tuesday at $47.26, while Musk has offered to purchase the social media platform for $54.20.
After the close Bloomberg reported that Apollo Global Management is in talks to lead a preferred financing for Musk’s bid that will exceed $1 billion.
The news came after investors were left scratching their heads Tuesday over comments Musk made during an interview at the Financial Times Future of the Car summit that seemed to hedge his plans.
“I don’t own Twitter yet, so this is not like a thing that will definitely happen,” Musk said, referring to his intention to reinstate former President Donald Trump’s Twitter account if he buys the company. “What if I don’t own Twitter?”
At current levels, Twitter’s merger arbitrage spread is among the widest of all pending US transactions, according to Bloomberg data. It represents a 14.7% gross return if the take-private plan goes through, compared with 8.36% in Nielsen’s take private deal, according to Bloomberg data.