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Twitter shares hit as Elon Musk puts £35bn takeover on hold

Twitter shares fall and Tesla shares soar as Elon Musk sparks speculation he will walk away from his £35bn deal to buy the social media platform.

  • In a tweet, Elon Musk said the acquisition was “temporarily on hold.”
  • The announcement raises the possibility that the tycoon abandons plans to buy Twitter
  • Any such move could cost Musk $1bn (£820m) in break fees.

Shares of Twitter fell and shares of Tesla soared as Elon Musk sparked speculation that he will walk away from his £35bn deal to buy the social media platform.

In a tweet that shocked Wall Street and Silicon Valley, Musk said the acquisition was “temporarily on hold.”

The announcement raised the possibility that the mogul might abandon plans to buy Twitter, a move that could cost him $1 billion (£820 million) in break fees.

Twitter shares hit as Elon Musk puts 35bn takeover on

Twitter shares fell as much as 25 percent on Wall Street before recouping some of the losses. By contrast, shares of Tesla, which have been hit by fears that Musk’s interest in Twitter will distract him from the electric-car maker he runs, rose 7 percent.

The 50-year-old billionaire said he would call off the deal due to concerns about the amount of spam and fake accounts on the site. Twitter estimates that 5 percent of its users are spam, but admitted last week that the figure could be higher.

Musk wants to know what the exact percentage is before moving on as he seeks to combat fake users and monetize the site.

Having lost a quarter of its value in minutes, Twitter stock rallied after Musk later tweeted that he was “still committed to the acquisition.” But they still fell 9 percent to $41, well below the offer price of $54.20 a share, in a sign that investors are increasingly doubting the deal will go ahead.

Markets analyst Neil Wilson said: “I always felt that [the] the deal was fishy and now i have a feeling it won’t happen and maybe never will.’

Neil Campling, an analyst at Mirabaud, added: ‘Laughable! We had always said that he could cut, run or change pitch at 11 hours and 59 minutes and 59 seconds on the clock. Thats false.

Tesla shares fell 33 percent in the weeks after Musk first took a stake in Twitter and then launched a large-scale takeover bid. Investors weren’t happy that Musk used large chunks of his shares in the electric-car maker to help finance the deal.

It has sold £7bn worth of Tesla shares and plans to take out more loans against its shares. Question marks over financing have hung over the deal from the start.

As a result, some believe Musk’s latest move was a ruse. Susannah Streeter, an analyst at Hargreaves Lansdown, said: ‘There are questions as to whether the fake accounts are the real reason behind this delaying tactic. The £35bn price tag is huge, and may be a strategy to push back on the amount you are willing to pay to acquire the platform.”

Musk’s tweet could also land him back in trouble with US regulators for taking to Twitter to announce the delay rather than through a regulatory filing.

He’s already in trouble with the US Securities and Exchange Commission, which is investigating his late disclosure on Twitter, when he racked up a stake.

Musk revealed his 9.2 percent stake on Twitter on April 4, a delay of at least 10 days since he crossed the 5 percent threshold for disclosing an equity stake.

And a court this week found Musk’s 2018 tweets about taking Tesla private, when he declared funding secured, to be inaccurate and reckless.

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