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Elon
Musk's
Twitter
profile
is seen
on a
smartphone
placed
on
printed
Twitter
logos in
this
picture
illustration
taken
April
28,
2022.
REUTERS/Dado
Ruvic/Illustration |
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FILE -
The
Twitter
application
is seen
on a
digital
device,
Monday,
April
25,
2022, in
San
Diego.
Shares
of Tesla
and
Twitter
have
tumbled
this
week as
investors
deal
with the
fallout
and
potential
legal
issues
surrounding
Tesla
CEO Elon
Musk and
his $44
billion
bid to
buy the
social
media
platform.
Of the
two,
Musk's
electric
vehicle
company
has
fared
worse,
with its
stock
down
almost
16% so
far this
week to
$728.
(AP
Photo/Gregory
Bull,
File) |
| |
Musk
says $44
bln
Twitter
deal on
hold
over
fake
account
data
reuters.com
HAWTHORN,
CA -
Elon
Musk
tweeted
on
Friday
that his
$44-billion
cash
deal for
Twitter
Inc
(TWTR.N)
was
“temporarily
on hold”
while he
waits
for the
social
media
company
to
provide
data on
the
proportion
of its
fake
accounts.
Twitter
shares
initially
fell
more
than 20%
in
premarket
trading,
but
after
Musk,
the
chief
executive
of
electric
car
market
Tesla
Inc
(TSLA.O),
sent a
second
tweet
saying
he
remained
committed
to the
deal,
they
regained
some
ground.
The
shares
were
down
9.6% to
$40.71
in
trading
on
Friday,
a steep
discount
to the
$54.20
per
share
acquisition
price.
Musk,
the
world's
richest
person,
decided
to waive
due
diligence
when he
agreed
to buy
Twitter
on April
25, in
an
effort
to get
the San
Francisco-based
company
to
accept
his
"best
and
final
offer."
This
could
make it
harder
for him
to argue
that
Twitter
somehow
misled
him.
Since
Musk
inked
his deal
to
acquire
Twitter,
technology
stocks
have
plunged
amid
investor
concerns
over
inflation
and a
potential
economic
slowdown.
The
spread
between
the
offer
price
and the
value of
Twitter
shares
had
widened
in
recent
days,
implying
less
than a
50%
chance
of
completion,
as
investors
speculated
that the
downturn
would
prompt
Musk to
walk
away or
seek a
lower
price.
read
more
"Twitter
deal
temporarily
on hold
pending
details
supporting
calculation
that
spam/fake
accounts
do
indeed
represent
less
than 5%
of
users,"
Musk
told his
more
than 92
million
Twitter
followers.
Under
the
terms of
Musk's
contract
with
Twitter,
he is
entitled
to ask
the
company
for
information
on its
operations
following
the
signing
of the
deal.
But this
is meant
to help
him
prepare
for his
ownership
of
Twitter,
not to
carry
out due
diligence
and
reopen
negotiations.
Twitter
is
planning
no
immediate
action
against
Musk as
a result
of
Musk's
comment,
people
familiar
with the
matter
said.
The
company
considered
the
comment
disparaging
and a
violation
of the
terms of
their
deal
contract,
but was
encouraged
by Musk
subsequently
tweeting
he was
committing
to the
acquisition,
the
sources
added.
Musk
came to
Twitter's
office
for a
meeting
on May 6
as part
of the
transaction
planning
process,
a
Twitter
spokesperson
said.
Twitter's
Chief
Executive
Parag
Agrawal
also
weighed
in,
tweeting
"While I
expect
the deal
to
close,
we need
to be
prepared
for all
scenarios."
On
Thursday,
Agrawal
announced
leadership
changes
and a
hiring
freeze.
read
more
REAL
OR FAKE?
Spam
or fake
accounts
are
designed
to
manipulate
or
artificially
boost
activity
on
services
like
Twitter.
Some
create
an
impression
that
something
or
someone
is more
popular
than
they
actually
are.
Musk
tweeted
a
Reuters
story
from ten
days ago
that
cited
the fake
account
figures.
Twitter
has said
that the
figures
were an
estimate
and that
the
actual
number
may be
higher.
The
estimated
number
of spam
accounts
on the
microblogging
site has
held
steady
below 5%
since
2013,
according
to
regulatory
filings
from
Twitter,
prompting
some
analysts
to
question
why Musk
was
raising
it now.
"This 5%
metric
has been
out for
some
time. He
clearly
would
have
already
seen
it... So
it may
well be
more
part of
the
strategy
to lower
the
price,"
said
Susannah
Streeter,
an
analyst
at
Hargreaves
Lansdown.
Representatives
for Musk
did not
immediately
respond
to
requests
for
comment
from
Reuters.
Tesla's
stock
rose 5%
on
Friday.
The
shares
have
lost
about a
quarter
of their
value
since
Musk
disclosed
a stake
in
Twitter
of April
4, amid
concerns
he will
get
distracted
as
Tesla's
chief
executive
and that
he may
have to
sell
more
Tesla
shares
to fund
the
deal.
There is
plenty
of
precedent
for a
potential
renegotiation
of the
price
following
a market
downturn.
Several
companies
repriced
agreed
acquisitions
when the
COVID-19
pandemic
broke
out in
2020 and
delivered
a global
economic
shock.
For
example,
French
retailer
LVMH
(LVMH.PA)
threatened
to walk
away
from a
deal
with
Tiffany
& Co.
The U.S.
jewelry
retailer
agreed
to lower
the
price by
$425
million
to $15.8
billion.
Acquirers
seeking
a get
out
sometimes
turn to
"material
adverse
effect"
clauses
in their
merger
agreement,
arguing
the
target
company
has been
significantly
damaged.
But
the
language
in the
Twitter
deal
agreement,
as in
many
recent
mergers,
does not
allow
Musk to
walk
away
because
of a
deteriorating
business
environment,
such as
a drop
in
demand
for
advertising
or
because
Twitter's
shares
have
plunged.
Musk
is
contractually
obligated
to pay
Twitter
a $1
billion
break-up
fee if
he does
not
complete
the
deal.
But the
contract
also
contains
a
"specific
performance"
clause
that a
judge
can cite
to force
Musk to
complete
the
deal.
In
practice,
acquirers
who lose
a
specific
performance
case are
almost
never
forced
to
complete
an
acquisition
and
typically
negotiate
a
monetary
settlement
with
their
targets.
DEFEAT
THE BOTS
Musk
has said
that if
he buys
Twitter
he "will
defeat
the spam
bots or
die
trying"
and has
blamed
the
company's
reliance
on
advertising
for why
it has
let spam
bots
proliferate.
He
has also
been
critical
of
Twitter's
moderation
policy
and has
said he
wants
Twitter's
algorithm
to
prioritize
tweets
to be
public.
Earlier
this
week,
Musk
said he
would
reverse
Twitter's
ban on
former
U.S.
President
Donald
Trump
when he
buys the
social
media
platform,
signaling
his
intention
to cut
moderation.
Trump,
who
started
a rival
social
media
app
called
Truth
Social,
took to
his
platform
on
Friday
to weigh
in.
"There
is no
way Elon
Musk is
going to
buy
Twitter
at such
a
ridiculous
price,
especially
since
realizing
it is a
company
largely
based on
bots or
spam
accounts,"
Trump
wrote in
a post,
adding
that his
site is
much
better.
Additonal
reporting
by
Nivedita
Balu in
Bengaluru,
Ken Li
in New
York and
Katie
Paul in
San
Francisco
Writing
by Anna
Driver
and
Editing
by
Alexander
Smith,
Nick
Zieminski
and
Alistair
Bell
Our
Standards:
The
Thomson
Reuters
Trust
Principles.
Advertise With Us:
Certified Minority Business Enterprise
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HI TECH NEWS
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SPORTS
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