Elon Musk Puts On Hold $44 Billion Deal For Twitter. Here's Why
On Friday, Elon Musk tweeted that his $44 billion purchase for Twitter Inc was "temporarily on pause" while he awaits evidence on the number of false accounts on the social media network, sending shares in the company plummeting.
Tesla CEO Elon Musk said he was still committed to the deal. Musk waived due diligence when he agreed to buy Twitter on April 25 in an effort to persuade the San Francisco-based firm to accept his "best and last offer."
Investor concerns about inflation and a potential economic downturn have caused technology stocks to plummet since then.
As investors worried that the slump would drive Musk to walk or seek a lower price, the difference between the offer price and the value of Twitter shares had increased in recent days, signifying less than a 50% chance of completion.
"Twitter deal on hold temporarily seeking details supporting calculation that spam/fake accounts constitute fewer than 5% of users," Musk said his 92 million Twitter followers.
A request for comment from Twitter was not immediately returned. The investors Musk recruited last week to raise $7.1 billion in fundraising had no immediate reaction.
Musk mentioned the bogus account data in a Reuters piece from 10 days earlier. The figures were an estimate, according to Twitter, and the true number might be higher.
In pre-market trading in New York, Twitter shares were down 16 percent at $38.06, well below the $54.20 per share acquisition price. Tesla Inc's stock was up around 5% today.
In one case, LVMH, a French retailer, threatened to pull out of an agreement with Tiffany & Co. The price of the jewellery retailer in the United States has been reduced by $425 million to $15.8 billion.