Elon Musk Opening Up About The Twitter Deal: On May 13, Musk tweeted that his proposal to purchase Twitter is “temporarily on hold” until he can obtain additional confirmation that the social platform’s user base is at least 95% actual individuals, rather than fake or spam accounts.
Is Elon Musk having second thoughts about the Twitter purchase, or is he simply trolling? Well, according to some rumours he may be attempting to renegotiate the price or possibly walk away from the deal.
The Twitter Takeover April 14, 2022. Elon Musk made an offer to purchase Twitter for $54.20 per share. Twitter accepted the offer on April 25th and agreed to be sold to a company “wholly owned” by Musk. The social networking corporation made no mention of co-investors in its announcement.
Elon Musk And Twitter Deal
Musk presently owns 9.1% of Twitter and is the company’s second-largest shareholder. Elon Musk has previously rebuffed an invitation to join Twitter’s board of directors. However, if he buys Twitter now, then it would have been a massive leveraged takeover.
To support the proposal, Musk had collected $25.5 billion in fully committed debt and margin loan funding from a dozen institutions.
The social media company had previously stated that it faced various risks until the transaction with Musk was completed, like whether advertisers would continue to spend on Twitter in the face of “potential uncertainty regarding future plans and strategy.”
Musk is contractually compelled to pay a $1 billion breakup fee if he walks away from the deal. In premarket trading today[e], Twitter shares plunged 17.7% to $37.10, their lowest level since Musk declared his ownership in the firm in early April.
Elon Musk has criticized Twitter’s regulations, claiming that the social media firm must be turned private to develop and become a true forum for free expression. He also stated that removing “spam bots” from the site will be one of his top goals.
There Is Uncertainty Over Musk’s Desire To Withdraw From The Deal[f] Elon Musk has placed his offer to buy Twitter (TWTR) on hold, only weeks after agreeing to take the firm private for $44 billion.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted on Friday. The revelation first pushed Twitter shares down more than 20% in pre-market trade before recovering slightly.
He then tweeted two hours later that he is “still committed to acquisition.” Musk referenced a May 2 Reuters report regarding Twitter’s most recent disclosure about its spam and fake account problem in his tweet regarding putting the purchase on hold. April 28.
Twitter estimates that fake or spam accounts accounted for less than 5% of the platform’s active users within the first three months of the year in its quarterly financial report. Twitter explained that the estimations were based on a survey of sample accounts and that the figures were “reasonable.”
However, it admitted that the measures had not been independently validated and that the true number of fraudulent or spam accounts may be larger. Twitter has had a spam problem for years, and the company has already stated that decreasing bogus and abusive accounts will be critical to its capacity to continue expanding.
It’s unclear why Musk would withdraw from the transaction due to the recent revelation. Some Are Referring To It As A “Circus” Musk converted “this Twitter circus show into a Friday the 13th horror show,” writes Wedbush Securities tech analyst Dan Ives in a note to clients on Friday.
If Musk cancels the arrangement, he will owe Twitter a $1 billion breakup fee. “The Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1 billion breakup fee,” Ives wrote.
“Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market.” Stocks, particularly tech stocks, have fallen substantially since Musk and Twitter agreed to buy the firm about three weeks ago.
The way Musk announced the deal’s halt — in a tweet — was also odd, at least by business merger and acquisition rules. Before closing a sale, acquirers often do due diligence, which is an examination of the firm’s finances and confidential information.
During that process, they may come across material that leads them to reconsider the acquisition or its value, but such a discovery is normally revealed in a filing with the Securities and Exchange Commission.
“Usually we’d see some sort of filing that would come first, an amendment to previous filings on the deal, that says, ‘we’ve uncovered some information in the process of due diligence and we’re reconsidering our acquisition,'” according to Josh White, an assistant professor of finance at Vanderbilt University and a former SEC financial economist.
“This happens as you get access to the books and access to proprietary information. What doesn’t normally happen is a tweet,” White said. According to White, the unexpected move may not be large enough to trigger SEC action, but it may attract the attention of Twitter’s attorneys.
According to SEC filings, Musk pledged to speak with Twitter before making any public remarks regarding the purchase, and to refrain from publishing any tweets that “disparage the company.”
Nonetheless, Twitter’s board will almost certainly want the purchase to go through due to its high valuation in comparison to the company’s current stock price. However, if the acquisition falls through, “I would expect Twitter’s current shareholders to potentially bring a lawsuit” alleging that Musk’s activities harmed them by causing the stock price to plummet, White noted.
A request for comment on Musk’s Friday tweets was not returned by Twitter. Concerns About The Deal’s Feasibility From The Start April 26. Even as Musk attempted to arrange finance for the buyout, doubts about the deal’s viability have been brewing since Twitter’s board approved the offer.
Musk stated that he will purchase Twitter for $54.20 per share. However, Twitter’s stock never achieved that level, remaining below $50 for weeks. That was a warning that investors were apprehensive that Musk would follow through on his promise.
Wall Street analysts were also skeptical of Musk’s ability to acquire Twitter, at least not for $54.20 per share. The consensus target price was less than $52, and the great majority of analysts rated the company’s shares as “hold.”
A big part of the problem has been Twitter’s relationship with Tesla’s (TSLA) fate. Musk, Tesla’s CEO, intended to borrow against a portion of his Tesla shares to finance the transaction, but Tesla’s price has been falling along with most other equities this year.
Musk’s selling of a large number of Tesla shares to help finance his Twitter transaction weighed on the carmaker’s stock. He didn’t have much of a buffer left after committing a large portion of his Tesla shares elsewhere if he needed to pay up more dollars to complete the Twitter takeover.
The Twitter transaction was fantastic news for Tesla (TSLA) shares, which were up 6% in premarket trade Friday. However, there are rumors that Tesla, the world’s most valuable automaker, has lost around one-third of its value since Musk announced his investment on Twitter.
Musk used his Tesla shares as leverage to acquire funds for the Twitter purchase, in addition to offering $8.5 billion of his Tesla shares last month, or around 6% of his ownership. However, the reduction in the value of Tesla shares has created concerns about his ability to proceed with the financing of the Twitter transaction.
According to the Wall Street Journal, the SEC and the Federal Trade Commission were also investigating Musk’s acquisitions of Twitter earlier this year and whether he appropriately reported them.
Musk’s Goals For Twitter
Musk has given few specifics about his goals for the social media platform, however, he has frequently spoken out against bot accounts that promote garbage content. He also claims that the company has been too eager to delete accounts that breach its content-moderation policies.
Musk made news when he said he would enable former President Donald Trump to return to Twitter after the takeover was complete and lift Twitter’s ban on former US President Donald Trump. January 6, 2021. Trump’s account was permanently deleted, following his followers’ attack on the US Capitol.
Twitter revealed earlier this week that it is halting most recruiting and backfills, except for “business-critical” jobs, and cutting back on other non-labor expenditures. It also disclosed the departure of two top executives, general manager of consumer Kayvon Beykpour and revenue product lead Bruce Falck.
Twitter CEO Parag Agrawal acknowledged the company’s leadership shakeup the day before in a series of tweets Friday afternoon. “Some have been asking why a ‘lame-duck’ CEO would make these changes if we’re getting acquired anyway,” Agrawal said.
“While I expect the deal to close, we need to be prepared for all scenarios and always do what’s right for Twitter. I’m accountable for leading and operating Twitter, and our job is to build a stronger Twitter every day.”
Can Musk Put The Twitter Acquisition On Hold?
No. First, the phrase “on hold” has no sense in this context. According to his agreement with the corporation, the transaction must be completed by October 24. Between now and then, Musk might claim the transaction is “on hold,” “steaming ahead,” or “just scrumptious.” But none of those statements would be meaningful. The agreement is binary: he either does or does not perform the business.
Did Musk Insult Twitter?
No, not really. By implying that Twitter’s regulatory submission on spam bots may have been inaccurate or deceptive. But, he simply requested “details supporting [the] calculation” that bots account for fewer than 5% of Twitter users. If Twitter’s submission was fake, it would be a major scandal.
In addition to possibly breaking the terms of its agreement with Musk, Twitter might face SEC penalties and investor lawsuits. Nonetheless, Musk has deliberately targeted two corporate lawyers, Vijaya Gadde and Jim Baker, sending waves of trolls their way. Twitter has not expressed public support for its leadership, nor has it said if this was a breach.
Is Musk Attempting To Back Out Of The Deal?
As previously said, he remains “committed” to the agreement. If he broke things off, he’d have to pay Twitter $1 billion, and Twitter could also seek a condition known as “specific performance,” which would essentially force Musk to follow through with the agreement.
Musk is also apparently looking for more equity capital to reduce the amount he’ll have to borrow against his Tesla ownership, which doesn’t seem like something he’d do if he were attempting to get out.
Musk may terminate the transaction and have Twitter pay him a $1 billion breakup fee in relatively restricted situations, most of which revolve around the prospect of a higher bid.
With the stock market in free fall, Twitter’s board is appearing smarter by the day for accepting Musk’s $54.20 per share offer; the company has no reason to back out of the transaction. https://youtu.be/0IpL9HTb5cA (1.29 – 1.56)
Is Musk Going To Face Consequences For This Tweet?
Twitter investors, especially those who sold their shares just based on his “on hold” declaration, may take action. If the stock recovers, they may claim that Musk forced them to incur a loss based on false information.
The problem is that Musk may claim, as he did in his 2019 “pedo guy” defamation trial, that he’s just an “idiot,” and that any reasonable investor would realize that he was bound by his agreement with Twitter and couldn’t truly put the sale on hold.
It’s similar to when he invited Twitter followers to vote on whether he should sell some of his Tesla shares when the transaction had been planned for months. You can’t dismiss anything Musk says, but you also can’t believe it. https://youtu.be/ZuUK_x8O6KI (0.08 – 0.36) We don’t know if Musk truly intends to withdraw from this agreement or is simply holding it for a long time to sort things out for himself, so why not we all chill for a bit and just wait until he makes a final decision.
Do not use questions as those disrupt the flow of the script Write it in even more “high stakes” – it can be pure bullshit Merket som løst [d]Åpnet på nytt Be careful of writing terms, such as “today”, because to the video will come out later than the news.
Write more compelling sub-headings. It’s important that they are not too long, so this title could be: “Elon Musk’s Desire to Withdraw For The Deal” Subheadings needs to be at least 300 words.
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