A new report says Elon Musk’s plan to buy Twitter is on the rocks because the SpaceX and Tesla CEO is unable to determine how many fake accounts the social media platform has.
Musk announced in April that he wanted to buy Twitter. The company first ran from the billionaire’s embrace but eventually supported the deal. Musk, on the other hand, has veered in his affections toward the proposal.
In mid-May, Musk said the purchase was on hold pending an effort to determine how many fake accounts the platform has. Twitter says about 5 percent of its accounts are fake; Musk puts the figure much higher.
At the time, commentators suggested the tactic might be part of a plan to lower the purchase price.
Since then, the deal has moved forward in fits and starts, with Musk saying he believes fake accounts amount to a larger share of Twitter accounts than the social media giant wants to admit.
A new chapter in the saga began Thursday when The Washington Post reported that “Musk’s camp concluded that Twitter’s figures on spam accounts are not verifiable.”
The deal, according to the report, is in “serious jeopardy.”
Although Twitter claimed it gave Musk’s teams extensive data, the billionaire’s advisers are arguing that they cannot evaluate the company’s prospects due to a lack of information, the Post reported.
The report said efforts to secure the financing to pull off the $44 billion acquisition have stalled.
Will Musk’s deal to buy Twitter fall through?
It also noted that Musk might not want to consummate the deal under its current terms because the price of Twitter’s stock has fallen. And there was a bit of blamesmanship.
The Post quoted “a person familiar with the discussions, speaking on the condition of anonymity because of the sensitive nature of the talks,” as saying, “Twitter has not been cooperative.”
However, Carl Tobias, a law professor at the University of Richmond, called the fake account issue “an excuse.”
He said Musk was raising it as grounds to back out of the deal if he should wish to do so.
A Friday report in The New York Times indicated that Twitter was unaware of the Musk team’s latest concerns and was planning to go forward with the deal.
“Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement,” the company said in a statement, according to the report. “We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
The Times noted that Twitter needs the deal.
“The stakes are high,” it said. “The most valuable part of Twitter right now is its acquisition agreement with Mr. Musk. Its shares are down about 24 percent since April, and trade well below the price agreed with Mr. Musk. Twitter’s stock fell 4 percent in premarket trading on Friday.
“Twitter is seeing pressure on its advertising business, has frozen hiring and is laying off some staff members. To accept less than the price it originally negotiated with Mr. Musk could expose Twitter to shareholder lawsuits.
“So while litigation could be costly, losing the deal may be even worse.”
