Hedge Funds are making big bets that Elon Musk will be forced to buy Twitter after all.

There is an investing strategy called M&A arbitrage. Elon Musk offered to buy out Twitter for $54.20 a share. He offered this because it was a funny number and a good enough offer to get the board to agree to sell.

In the year since Twitter has been trading between $50 and $30 which is much more than what most analysts agree the company should be worth.

Twitter should really be trading at around $20 a share, today’s market price represents the probability that Musk will make the purchase he promised to five months ago. The closer to $54.20 the price goes the more certain the market is that he will buy twitter.

Last week the stock was trading at $42 which meant analysts thought there was a 70% chance of the deal going through, after an announcement by Musk that he did want to buy the company after all, the price rose to $49 which meant the analysts now though there was a 90% chance of Musk taking over.

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Edited By: Andrew Gonzales

Music Courtesy of: Epidemic Sound

Select Footage Courtesy of: Getty Images

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