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Musk Says Twitter Deal "Temporarily on Hold"

Published 05/13/2022, 05:47 AM
Updated 05/13/2022, 05:53 AM
© Reuters

© Reuters

By Geoffrey Smith 

Investing.com -- Elon Musk said on Friday his $44 billion deal to take Twitter (NYSE:TWTR) private is "temporarily on hold", throwing the fate of his leveraged buyout plan into doubt. 

"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," Musk said via the microblogging site. Over an hour later, he added in a new tweet: "Still committed to acquisition."

Twitter had said in a filing earlier this month that fake and spam accounts represent less than 5% of the overall total of accounts using the network. Musk has indicated that he thinks it's higher, and has said that getting them off the network would be one of his top priorities if his deal goes through.

The likelihood of the deal closing has, however, fallen for other reasons this week, owing to the sharp drop in the value of Tesla (NASDAQ:TSLA) shares, which Musk was due to use as collateral for a $12 billion margin loan from Morgan Stanley (NYSE:MS) to finance the deal. Bloomberg reported on Thursday that Musk was looking at raising $6 billion in preferred equity from the company instead, reducing the amount he would have to borrow to get the deal over the line.

The merger agreement would force Musk to pay a break fee of $1 billion if the deal falls through due to - among other things - a failure to complete its financing. It's not clear whether the reason given by Musk on Friday would allow him to get around that clause.

Twitter stock fell 23% in premarket trading in response to the news, as market participants assigned a higher probability to the deal falling through. By 6:05 AM ET (1005 GMT), it was indicated at $35.24 a share, around 10% below where it was trading before Musk announced his offer of $54.20 a share. Tesla stock, by contrast, rose 4.8% as the risk of a significant equity overhang faded.  

Musk's bid for Twitter had allowed the social media stock to defy the sharp sell-off in the Nasdaq Composite over the last month. That outperformance threatens to reverse sharply if the deal unravels, not least due to the underlying weakness of Twitter's business. The company's latest quarterly results showed revenue grew at its slowest in six quarters, while it also had to admit to overstating its active users for most of the last three years, if only by around 1%. 

Musk himself has said he would sell his existing 9.2% stake in the company if the bid is not accepted. 

The accumulation of that stake is reportedly under investigation by the Securities and Exchanges Commission after Musk missed a deadline to declare his interest as he bought. 

 
 
 

Latest comments

So many mind melted leftists and rightists. These comments are GOLD! The awesome thing about forums, is people have no filter and you get to hear the most ridiculous stuff. All of these Elon theories are amazing.
People are so gullible ( especially trumpers) , anyway , Twitter is a smoke-screen to sell off Tesla before it collapses to 50 bucks! You not-smart suc ker s
P O N Z I
Why be surprised? Happened before.
Truth Social accounts are thorouly vetted before you can post one 'Truth'. No bots. No lopsided censorship. Truth Social rocks.
"No lopsided censorship" -- Cow accounts get banned before they post anything.
it's easy to vet when they only have 30 users
On Truthiness Social, the "spam/fake accounts do indeed represent" WAY MORE "than 5% of users".  A lot of those accounts opened by management themselves.
Sounds like "funding secured".
Enron Musk just needs continuous attention
i think the dems ministry of truth adhoc response showed the ugly face of the dems...with his latest bomb to bring trump back who knows what pressure was put on him
ridiculous
Manipulator? Time to go to jail?
In the meanwhile he might have sold a portion of his 9.2% stake in Twitter at 52 USD, making 3.5B USD. Thus, can easily afford the 1B USD penalty
Some of the opinion here are the worst. Anything and everything has to be associated with Trump. Just as O so bama blamed the tree Bush for everything that he was incompetent to accomplish. It shows personal insecurity and incompetence.
Like yours for bringing it up?
Trump does stick his nose in "Anything and everything"
Tesla stock is now a buy, since the Twitter deal is dead (not that it was really that much alive in the first place).....
I told you all long ago that he would do this. if he waits for one more month, he can buy Twitter at $18/share. Twitter is really a teenager stock. Trump is a teenager. he never 🪴 grows up
I sure do miss Trump's tweets about the stock market going up hundreds of points a day 😁
good morning America
fake accounts? lol its more abou h bleeding cash right now, he should be in prison
His deals are as bogus as him.
. Even if you have never built a company yourself, let alone a car...Well he is bogus isnt he?
Dude needs to go to prison. This market manipulation is blatant financal crime.
All of your politicians should be in prison but rhe system is rigged so buzz off
Learn 2 play
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