Elon Musk puts $ 44bn Twitter deal ‘on hold’

Elon Musk has put his takeover of Twitter “temporarily on hold” over concerns over a number of spam and fake accounts on the social media platform, raising fresh suspicion that the Tesla chief executive will complete the $ 44bn deal.

The billionaire entrepreneur said on Twitter on Friday that the deal was being held “pending details” in a calculation suggesting the company’s regulatory filings suggesting a number of fake accounts on the platform under 5 per cent of its 229mn users.

The estimation was included in the company’s quarterly filing last week. The same calculation has also been reported in each quarterly filing going back to 2014.

The statement immediately hit Twitter’s share price, with the stock tumbling about 20 per cent in pre-market US trading.

Musk followed up with an additional tweet two hours later in which he said he was “still committed to acquisition”. That helped share their losses, leaving them down about 10 per cent, closing at $ 40.72 on Friday.

It is unclear what his notice of legal effect was and precisely what grounds he has to hold on to the deal.

The suspect introduced by Musk’s tweet is the latest example of the whirlwind manner in which the transaction came together, which even led Musk to waiving his right to carry out due to negotiating terms.

Twitter and Musk did not immediately respond to a request for comment.

Twitter now trades at a 25 per cent discount to the $ 54.20-per-share price Musk agreed to pay in mid-April, signaling that investors wouldn’t believe a deal would happen anywhere near that price and possibly not at all.

Tesla shares, which has fallen 33 per cent since Musk said on Twitter that he was giving serious thought to buying the social media platform in late March, rallied more than 5 per cent on Friday.

Musk has said one of his priorities for the platform is to “defeat the spam bots or die trying” and to authenticate human accounts.

In Twitter’s filings going back eight years, the company has said less than 5 per cent of its monetisable daily active users were fake or spam accounts.

“In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” Twitter said. in its latest quarterly filing.

Musk’s move comes just one day after Twitter chief executive Parag Agrawal announced an immediate hiring freeze, cost-cutting measures and two senior leaders of the departure. The company is facing long-term pressure from investors over slow growth compared with rivals such as Meta and TikTok.

In a Twitter thread on Friday, Agrawal addressed the changes, saying that he “expects the deal closer” but the company needs “to be prepared for all scenarios”.

The billionaire’s bid to buy Twitter sent shockwaves throughout the technology and financial world, though many speculated that Musk wasn’t serious about the deal or that he would eventually walk away. The Tesla chief agrees to pay a $ 1bn break fee if it is rejected.

Daniel Ives, strategist at Wedbush Securities, wrote in an analyst note: “The Street will see this deal as 1) falling apart, 2) negotiating a lower deal price for Musk, or 3) Musk simply walking away from the deal with a. $ 1 billion break-up fee. “

Video: Elon Musk talks to the FT about Twitter, Tesla and Trump

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker