Elon Musk announces his Twitter deal is ‘temporarily on hold’
Elon Musk announces that his $44 billion Twitter deal is ‘temporarily on hold’, sending shares of the social media giant plunging 25% in premarket trading.
- Tesla’s CEO announced this morning that his giant takeover bid is on hold.
- Want more information about the number of spam and fake accounts
- Twitter said earlier this month that spam accounts are less than 5% of the total.
- Shares plunged 25% in premarket trading, continuing a huge downward trend
Elon Musk has announced that his $44 billion acquisition of Twitter is temporarily on hold pending details on the number of spam accounts and bots on the social media platform.
The company said earlier this month that fake or spam accounts made up less than 5 percent of its 229 million users during the first quarter.
But Musk is now pausing his mammoth acquisition to demand more information on the numbers. Twitter’s board of directors approved the purchase, but it has not yet been fully finalized.
Shares of the social media company fell 25 percent in premarket trading this morning, continuing a massive downward trend since its April 25 takeover bid was announced.
The world’s richest man said on Twitter today: “The Twitter deal is temporarily on hold pending details to support the calculation that spam/fake accounts account for less than 5% of users.”
Elon Musk’s $44 billion acquisition of Twitter is temporarily on hold pending details on the number of spam accounts and bots on the social media platform.
He linked to a Reuters report from May 2 indicating Twitter’s estimate that bots were only a small percentage of the site’s users.
It is unclear what the legal effect of his notice was.
Prices have plummeted since the tech giant agreed to the Musk purchase deal.
The deal to announce that Tesla’s CEO would take the company private was announced on April 25, when the stock closed at $51.70.
Since then, prices have been falling further and further to their last close on Thursday at $45.08, a drop of nearly 13 percent, meaning the company is now worth $9 billion less than the amount Musk bet on her.
Twitter did not immediately respond to a request for comment.
This week, a US firm betting against the company’s share prices said Musk could bid lower for Twitter due to falling shares and poor financial performance.
Short-selling firm Hindenberg Research said there is a “significant possibility” that the businessman will try to pay less than the agreed price of $54.20 per share that was accepted by Twitter’s board.
Musk is now pausing his mammoth takeover demanding more information on the numbers.
The sharp drop in the Nasdaq stock market since the deal closed implies a much lower value for Twitter, whose value is being propped up by the takeover bid.
In a document released Monday, the company said: “We support Musk’s efforts to take Twitter private and see a significant chance the deal will close at a lower price.”
They added that if Musk decides to leave, Twitter’s shares could drop by as much as 50 percent.
But the SpaceX founder might have to pay $1 billion just to back out of the deal in a break fee.
Twitter had said it faced several risks until the Musk deal was closed, even if advertisers would continue to spend on Twitter.
Musk had said that one of his priorities would be to remove “spam bots” from the platform.
The announcement is another twist amid signs of internal turmoil over its planned purchase of Twitter, including the fact that the social media company fired two of its top managers on Thursday.
Yesterday, it was revealed that US regulators were looking into the Tesla CEO’s buyout after he was delayed in reporting the buyout and thus failed to provide sufficient warning that a takeover bid was looming.
The 50-year-old’s first move to buy Twitter was buying a 9.2 percent stake in the tech company in mid-February.
But he did not disclose his purchase to the Securities and Exchange Commission (SEC) until at least 10 days later, on April 4.
Any investor crossing a 5 percent stake must file a form with the SEC within 10 days. It serves as an early signal to stakeholders that a large investor might try to take over the company.
Musk’s April 4 presentation also characterized his involvement as passive, meaning he did not plan to take over Twitter or influence its management or business.
The next day, however, he was offered a position on Twitter’s board, and a couple of weeks later, the world’s richest man had closed a $44 billion deal to buy the social media giant.
The SEC investigation was first reported Wednesday by The Wall Street Journal.
This week, Musk also sparked a fierce debate after saying he would allow Donald Trump back on Twitter if and when he takes the reins, in line with his earlier statements that he planned to err on the side of free speech rather than prohibitions and censorship.