Musk suspends Twitter takeover
Tech billionaire Elon Musk has put his deal to buy Twitter on hold. Musk wrote on Twitter that he first wanted to wait for calculations to show that accounts without real users actually accounted for less than five percent. The online service published this estimate earlier in the week.
Stock loses value
Twitter stock quickly fell nearly a quarter in premarket trading after Musk’s tweet, to trade at around $34.50. That’s a far cry from the $54.20 a share Musk had promised shareholders. The paper went out of business on Thursday at $45.08 – a sign of investor skepticism that Musk is actually going through with the deal. The stock fell below $37 in premarket trading.
The boss of the electric car manufacturer Tesla and currently the richest person in the world had agreed with the Twitter board of directors on a takeover worth around 44 billion dollars. But he is still dependent on enough shareholders wanting to sell him their shares. Twitter and Musk previously wanted to close the deal by the end of the year. In the past few months, he has already bought a good nine percent stake in Twitter on the stock exchange.
Funding problems?
Speculations are now beginning as to whether the unclear proportion of fake accounts is actually the reason for the temporary stop of the deal. Musk knows that such fake users are a problem: he himself had already stated that he wanted to ban accounts that are used to send spam messages from the platform. The question could also serve as an excuse to exit the purchase – or to be able to lower the bid. In any case, Twitter and Musk had agreed on a penalty of one billion dollars each in the event that one of the sides should terminate the deal.
Problems had already become apparent in the past few days. Musk originally wanted to borrow around $12 billion of the purchase price, which would be secured with his Tesla shares. But after Tesla’s share price plummeted from around $1,000 to just $728, the plan became increasingly unfavorable to him. Financial service Bloomberg reported on Thursday that Musk is looking for alternative sources of funding instead of the equity-backed loan.
It was initially unclear what legal consequences Musk’s announcement now has. Investors have long criticized Twitter for the fact that the company is growing more slowly than some competitors such as TikTok or Meta, Facebook’s parent company. Elon Musk has already announced cost savings and a hiring freeze in the event of a takeover. He also wants the former US President, whose account was blocked, to tweet again.
