The Elon Musk Twitter deal is now ‘temporarily on hold,’ says the billionaire, in a tweet today. Twitter had told him that spam and fake accounts represent fewer than 5% of users, and Musk now says he wants to see the evidence for this.
While Musk followed up with ‘Still committed to acquisition,’ some are suggesting that this is not the case …
Background
The Tesla and SpaceX CEO last month offered to buy Twitter outright at a price per share which valued the company at around $44B – a significant premium over its then-current value. This followed his quiet purchase of almost 10% of the company.
Twitter later announced that it would accept Musk’s offer of $54.20 per share, inviting him to join the company’s board. Most reactions to the news were best described as less than enthusiastic, with most fearing that the entrepreneur’s vision of unrestrained free speech would amount to those with the loudest and most aggressive voices prevailing. There are also fears that disinformation will flourish to an even greater extent.
Elon Musk Twitter deal on hold
Musk tweeted the update today.
Three theories are now circulating about the reason behind the announcement.
Theory 1: Musk can no longer afford the purchase
Vanity Fair summarises a Hindenburg report questioning the viability of the purchase plan.
Theory 2: Musk wants to renegotiate
Some are suggesting that this is simply paving the way to reduce his offer – possibly prompted by his co-investors, suggests Reuters.
Theory 3: Musk wants to take the money and run
Musk sold $8.5B worth of Tesla shares to help fund the purchase, and a range of factors – some macroeconomic, some specific to Musk – saw the EV maker’s share price fall 27% since then. At today’s price, Musk could repurchase the shares for $6.2B.
As things stand, he’s on the hook for a $1B penalty clause if he walks away from the deal – though would still make money. But some believe raising this concern is paving the way for him to be able to avoid the penalty by claiming Twitter misled him.
The only thing one can say with certainty is we’ll have to wait and see. No-one but Musk knows what he intends to do, and many would argue that the statement could be shortened to ‘No-one knows what he intends to do.’
Photo: Jeremy Bezanger/Unsplash