May 17, 2022

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

2 min read

Elon Musk has put his takeover of Twitter “temporarily on hold” over concerns about the number of spam and fake accounts on the social media platform, raising fresh doubt over whether 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 supporting” a calculation in the company’s regulatory filings suggesting that the number of fake accounts on the platform represents 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 shares pare their losses, leaving them down almost 10 per cent, closing at $40.72 on Friday.

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

The doubt introduced by Musk’s tweet is the latest example of the whirlwind manner in which the transaction came together, which even led to Musk waiving his right to carry out due diligence while 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, signalling that investors do not believe a deal will happen anywhere near that price and possibly not at all.

Tesla shares, which have fallen 33 per cent since Musk said on Twitter that he was giving serious thought to buying the social media…



2022-05-13 19:39:55

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