Elon Musk‘s deal to buy Twitter is in serious jeopardy, three people familiar with the matter say, as Musk’s camp concluded that Twitter’s figures on spam accounts are not verifiable.
Musk’s team has stopped engaging in certain discussions around funding for the $44 billion (about R743bn) deal, including with a party named as a likely backer, one of the people said. The people spoke on the condition of anonymity because of the sensitivity of the discussions.
Talks with investors have cooled in recent weeks as Musk’s camp has raised doubts about the recent data “fire hose” – a trove of data sold to corporate customers – it received from Twitter. The doubts from Musk’s team about the spam figures signal it believes it does not have enough information to evaluate Twitter’s prospects as a business, the people said.
Now that Musk’s team has concluded it cannot verify Twitter’s figures on spam accounts, one of the people said, it is expected to take potentially drastic action. The person said it was likely that a change in direction from Musk’s team would come soon, though they did not say exactly what they thought that change would be.
The spam accounts are not the only reason Musk might try to get out of the deal. Twitter’s share price has fallen dramatically since his takeover bid in April, leading to the impression that he is overpaying. And Musk also runs two other major companies, Tesla and SpaceX, along with some start-ups.
But the terms of the deal mean it wouldn’t be easy for Musk to walk away. Musk has agreed to complete it unless something major happens to Twitter’s business, and legal experts doubt the bot issue would qualify.
Twitter, which initially fought Musk’s takeover bid, would be a weaker company if the deal fell apart than when Musk first bought a stake, and experts expect Twitter to fight to get it done. Twitter has said it intends to complete the deal. Even if Musk persuades a judge to let him walk away, he could still be on the hook for the deal’s $1bn break-up fee.
Twitter spokesperson Brian Poliakoff declined to comment but referred to a statement the company made in June.
“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,” Twitter said in the June statement. “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.
Source: IOL
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