Icahn, Others Clean Up Musk’s Twitter About-Face

Shares of Twitter rose 22% to $52 on Tuesday. Mr. Icahn paid in the mid-$30s a share for the stake, the people said, meaning the estimated profit for the Icahn Enterprises LP could exceed $250 million.

Other big-name investors, including DE Shaw Group and Daniel Loeb’s Third Point LLC, have also placed bets on Twitter shares in recent months and managed to post substantial gains of their own, other people familiar with the matter said.

Mr Musk offered overnight on Monday to close the Twitter acquisition on the terms he initially agreed to in the spring, as a trial to resolve the issue loomed. It was a sharp and surprising about-face after a months-long campaign to get out of the deal.

Mr. Icahn made the investment with the Tesla billionaire’s conviction Inc.

The chief would not go through with a test he seemed likely to lose, some of the people said. Mr. Icahn also believed the stock was worth near the mid-$30s in the long term anyway, meaning the downside would be limited even if Mr. Musk prevailed in the test.

Twitter is the latest in a list of smart investments the octogenarian activist investor has made in recent years, including in Netflix Inc.

and Apple Inc.

Mr. Musk’s move to pursue the transaction ultimately vindicated the belief of many so-called merger-arbitrage investors that it would close at the $54.20 per share price he had agreed to pay. Shares for much of the spring and summer traded below $40 before rallying somewhat recently, providing a tempting opportunity for those looking to bet against the world’s richest man.

Write to Cara Lombardo at [email protected]