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Twitter under shareholder pressure to seek deal with Musk, sources say

Twitter Inc is coming under increasing pressure from its shareholders to negotiate with Elon Musk even though the world's richest person has called his $43 billion bid for the social media platform his best and final offer, people familiar with the matter said on Sunday.

While the views of Twitter shareholders vary over what a fair price for a deal would be, many reached out to the company after Musk outlined his acquisition financing plan on Thursday and urged it not to let the opportunity for a deal slip away, the sources said, speaking on condition of anonymity.

Twitter's board is expected to find that Musk's all-cash $54.20 per share offer for the company is too low by the time it reports quarterly earnings on Thursday. Nonetheless, some shareholders who agree with that stance still want Twitter to seek a better offer from Musk, whose net worth is pegged by Forbes at $270 billion, the sources told Reuters.

One option available to Twitter's board is to open its books to Musk to try to coax him to sweeten his bid. Another would be to solicit offers from other potential bidders. While it is not yet clear which path Twitter will take, it is increasingly likely that its board will attempt to solicit a better offer from Musk even as it rebuffs the current one, the sources said.

“I wouldn't be surprised to wake up next week and see Musk raise what he called his best and final offer to possibly $64.20 per share,” one of the fund managers who is invested in Twitter said on condition of anonymity to discuss private conversations with the company.

“He could also drop the whole thing entirely. Anything is possible,” the fund manager said about Musk's offer.

Twitter shares closed at $48.93 on Friday, a significant discount to Musk's offer that reflects the uncertainty over his bid's fate.

Twitter adopted a poison pill after Musk made his offer to prevent him from raising his more than 9% stake in the company above 15% without negotiating a deal with its board. In response, Musk has threatened to launch a tender offer that he could use to register Twitter shareholder support for his bid.

A concern that Twitter's board is weighing is that unless it seeks to negotiate a deal with Musk, many shareholders could back him in a tender offer, the sources said. While the poison pill would prevent Twitter shareholders from tendering their shares, the company is worried that its negotiating hand would weaken considerably if it was shown to be going against the will of many of its investors, the sources added.

Musk, the chief executive of electric car maker Tesla Inc , has been meeting with Twitter shareholders since he unveiled his offer on April 14, seeking support for his bid. Musk has said Twitter needs to be taken private to grow and become a genuine platform for free speech.

Representatives for Twitter and Musk did not immediately respond to requests for comment.

The Wall Street Journal reported earlier on Sunday on some of Musk's meetings with Twitter shareholders.

‘Intrinsic value’

The price expectations among Twitter shareholders for the deal diverge largely based on their investment strategy, the sources said. Active long-term shareholders, who together with index funds hold the biggest chunk of Twitter shares, have higher price expectations, some in the $60s-per-share, the sources said. They are also more inclined to give Parag Agrawal, who became Twitter's chief executive in November, more time to boost the value of the company's stock, the sources added.

“I don't believe that the proposed offer by Elon Musk ($54.20 per share) comes close to the intrinsic value of Twitter given its growth prospects,” Saudi Arabia's Prince Alwaleed bin Talal, a Twitter shareholder, tweeted on April 14.

Short term-minded investors such as hedge funds want Twitter to accept Musk's offer or ask for only a small increase, the sources said. Some of these are fretting that a recent plunge in the value of technology stocks amid concerns over inflation and an economic slowdown makes it unlikely Twitter will be able to deliver more value for itself anytime soon, the sources added.

“I would say, take the $54.20 a share and be done with it,” said Sahm Adrangi, portfolio manager at Kerrisdale Capital Management, a hedge fund that owns 1.13 million shares in Twitter, or 0.15 percent of the company, and has been an investor since early 2020.

One silver lining for Twitter's board is that Musk's offer did not appear to convert his army of Twitter followers into new shareholders in the San Francisco-based company who could back his bid, the sources said. Twitter's retail investor base has increased from about 20 percent before Musk unveiled his stake on April 4 to some 22 percent, according to the sources.

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Ryanair cabin crew in Spain announce 12 new days of strikes in July

Spain-based cabin crew at Ryanair plan to strike for 12 days this month to demand better working conditions, the USO and SICTPLA unions said on Saturday, raising the prospect of travel chaos as the summer tourist season gets under way.

The announcement came on the final day of the crews’ current strike, which began on Thursday and forced Ryanair to cancel 10 flights in Spain on Saturday.

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Cabin crew will strike on July 12-15, July 18-21 and July 25-28 across the 10 Spanish airports where Ryanair operates, the unions said in a statement.

“The unions and crew of Ryanair … demand a change of attitude from the airline,” they said in a statement, calling for Ryanair to resume negotiations on working conditions.

The unions also urged the government “not to allow Ryanair to violate labor legislation and constitutional rights such as the right to strike.”

Airline workers across Europe have been staging walkouts as the sector adapts to a resumption of travel after pandemic lockdowns.

Spain-based cabin crew at easyJet are striking for nine days this month for higher pay. The airline cancelled five flights from Spain on Saturday.

Workers at Paris’ Charles de Gaulle airport went on strike on Friday and into Saturday, forcing the cancellation of about 10 percent of flights.

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Tesla braces for delayed delivery due to China plant shutdown

Tesla Inc. is expected to announce quarterly production and delivery figures this weekend that will likely be among the worst of the year – and break its multi-quarter streak of record-setting results – due largely to an extended shutdown of its factory in Shanghai.

The electric vehicle maker may have delivered more than 261,000 vehicles globally during the three months ended in June, according to nine analysts surveyed by Bloomberg, ending a two-year stretch of consecutive quarterly gains.

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Tesla handed over more than 310,000 vehicles in the first three months of the year, more than any previous quarter.

“We cut our second-quarter deliveries estimate by 65,000 to 245,000 units, reflecting a prolonged Covid 19-related shutdown and logistical challenges in the Shanghai factory,” wrote Emmanuel Rosner of Deutsche Bank in a research note to clients. “Recall that during the first-quarter call, CEO Elon Musk had provided directional guidance of sequentially flat deliveries for the quarter but the situation in China worsened subsequently,” only improving in early June.

Shares of Tesla rose 1.2 percent to close trading Friday at $681.79, but the stock is down about 35 percent so far this year.

Deliveries are one of the most closely watched metrics at Tesla. They underpin the Austin, Texas-based company’s financial results and are widely seen as a broad barometer of consumer demand for EVs amid a wider shift away from the internal combustion engine.

Many large automakers will announce US sales results Friday but Tesla, which reports global totals, hasn’t specified a release date.

Dan Levy, an analyst with Credit Suisse, reduced his delivery estimate for the period to 242,000 units. “In aggregate, we believe the Shanghai shutdown accounted for about 90,000 units of lost production in the second quarter,” Levy wrote in a note to clients.

Tesla makes the Model S, X, 3 and Y vehicles at its plant in Fremont, California. It also produces Models 3 and Y at a factory near Shanghai. The company has begun delivering the first Model Ys from its new plant near Berlin and held a “Cyber Rodeo” event for 15,000 people in April to celebrate a new factory in Austin.

‘Money Furnaces’

However, both Berlin and Austin have been slow to ramp up production, with Musk warning in a late May interview that both plants are “gigantic money furnaces.”

Analysts and investors are also worried that the price hikes automakers are imposing to combat soaring raw material costs will weigh on demand. Tesla had boosted its sticker prices by as much as $6,000 a car earlier this month, according to Electrek.

A stronger-than-expected delivery number could provide a boost to Tesla’s stock, which is down more than 35 percent this year amid wider market concerns about rising energy costs, inflation and a potential recession.

Musk shares many of those concerns and is in the process of laying off 10 percent of Tesla’s salaried work force while pushing others to return to the office.

Earlier this week, Tesla laid off roughly 200 people on its Autopilot team, mostly hourly employees who worked as data annotation specialists.

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Regulator urges Germans to prepare for possible gas shortage

Fearing Russia might cut off natural gas supplies, the head of Germany’s regulatory agency for energy called on residents Saturday to save energy and to prepare for winter, when use increases.
Federal Network Agency President Klaus Mueller urged house and apartment owners to have their gas boilers and radiators checked and adjusted to maximize their efficiency.
“Maintenance can reduce gas consumption by 10 percent to 15 percent,” he told Funke Mediengruppe, a German newspaper and magazine publisher.
Mueller said residents and property owners need to use the 12 weeks before cold weather sets in to get ready. He said families should start talking now about “whether every room needs to be set at its usual temperature in the winter – or whether some rooms can be a little colder.”
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The appeal came after Russia reduced gas flows to Germany, Italy, Austria, the Czech Republic and Slovakia earlier this month, as European Union countries scramble to refill storage facilities with the fuel used to generate electricity, power industry and heat homes in the winter.
Russian state-owned energy company Gazprom blamed a technical problem for the reduction in natural gas flowing through Nord Stream 1, a pipeline which runs under the Baltic Sea from Russia to Germany.
The company said equipment getting refurbished in Canada was stuck there because of Western sanctions over Russia’s invasion of Ukraine.
German leaders have rejected that explanation and called the reductions a political move in reaction to the European Union’s sanctions against Russia after it invaded Ukraine.
Vice Chancellor Robert Habeck, who is also Germany’s economy and climate minister and responsible for energy, has warned a “blockade” of the pipeline is possible starting July 11, when regular maintenance work is due to start. In previous summers, the work has entailed shutting Nord Stream 1 for about 10 days, he said.
The question is whether the upcoming regular maintenance of the Nord Stream 1 gas pipeline will turn into “a longer-lasting political maintenance,” the energy regulator’s Mueller said.
If the gas flow from Russia is “to be lowered for a longer period of time, we will have to talk more seriously about savings,” he said.
According to Mueller, in the event of a gas supply stoppage, private households would be specially protected, as would hospitals or nursing homes.
“I can promise that we will do everything we can to avoid private households being without gas,” he said, adding: “We learned from the coronavirus crisis that we shouldn’t make promises if we’re not entirely sure we can keep them.”
He said his agency “does not see a scenario in which there is no more gas coming to Germany at all.”
Also on Saturday, German chemical and consumer goods company Henkel said it was considering encouraging its employees to work from home in the winter as a response to a possible supply shortage.
“We could then greatly reduce the temperature in the offices, while our employees could heat their homes to the normal extent,” Henkel CEO Carsten Knobel told daily newspaper Rheinische Post.
Earlier this month, Habeck activated the second phase of Germany’s three-stage emergency plan for natural gas supplies, warning that Europe’s biggest economy faced a “crisis” and storage targets for the winter were at risk.
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