Elon Musk sows doubt over Twitter deal but still ‘hold all the cards’


Doubts have risen in recent days that Musk will be able to back his acquisition of Twitter, and that the entrepreneur may be considering dropping his bid price for the micro-blogging site. The entire transaction has been a frenzied and unconventional affair, largely followed on Twitter. Musk divulged a more than 9 percent stake in the company from “just” a prolific user and then began an unsolicited takeover offer — without detailed financing plans — within a matter of weeks. It all came together at a somewhat breakneck speed as Musk skipped an opportunity to look beyond what’s publicly available to Twitter’s finances.

“It will also be questioned whether fake accounts are the real reason behind this delayed strategy,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdowne, noting that the focus is on free speech rather than wealth creation. They seem to be promoting. Primary motivation for acquisition. The $44 billion price tag is huge, and it could be a strategy to recoup the amount it’s willing to pay to acquire the platform. ,

Twitter shares fell 10 per cent on the development.Credit:AP

The proposed acquisition includes a $US1 billion breakup fee for each party, which Musk will have to pay if he terminates the deal or fails to fund the acquisition as promised. It’s not clear whether an update by Twitter on the number of fake accounts — if physically higher than 5 percent — will trigger a so-called content adverse effects clause to exempt Musk from breakup charges.

“Musk should have slowed down for a second and not been so hasty,” said Andrew Friedman, partner at law firm Olshan Fromm and Wollowski. “He should have done what every other acquirer buying a company the size of Twitter would do and that’s due diligence. But Musk is Musk and he’s going to do what he wants to do.”

The spread on the deal, which signals that Wall Street believes the takeover will be complete, rose to $US9.11 on Thursday, up from $US8.11 in the previous session. It was the widest level since the billionaire launched his bid to buy Twitter last month at US54.20 – and double that of last week when he announced a financing commitment of about $US7.1 billion.

Musk’s latest tweets landed just hours after news that Twitter was freezing hiring as part of pre-deal cost-cutting efforts. Two of Twitter’s top leaders are also leaving. The two executives said in separate public positions, Kyvan Baccour, head of consumer products and Bruce Falk, in charge of revenue products, were both asked to leave the company.

The change reflects the current state of Twitter while it awaits a new owner. Hindenburg Research LLC, an investment research firm focused on activist short-selling, said Monday it sees a “significant risk” that Musk’s proposed offering falls short.

“The Twitter board has been taken hostage and only itself is to blame for this mess. No other buyers will come forward – if Musk decides he’s still interested he can state his price and it won’t be higher.

Neil Campling, head of TMT research at Mirabaud Equity Research

Analysts cited the ongoing slowdown in technology stocks, Twitter’s own weak first-quarter results, which include retesting several years of user numbers, and the possibility that Musk could lose his ground if the deal doesn’t come together. Will sell 9 percent stake.

Employees at Twitter have been on an emotional roller coaster for weeks. An employee said Friday he felt like he worked in a circus and was considering a job change for the first time.

Aside from doubts over the extent of spambots on Twitter’s platform, the world’s richest man is still working to secure money to close the deal. According to people with knowledge of the matter, Musk is in talks with investors to raise enough equity and preferred financing to eliminate the need for any margin debt associated with his Tesla shares.

He recently disclosed equity commitments of US$7.1 billion from investors including Larry Ellison, Sequoia Capital, Qatar Holding and Saudi Prince Alwaleed bin Talal, the latter adding his Twitter stock to the deal.

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“Musk never had full funding – we know that from his relentless efforts to get financial backing – but he also had all the cards,” said Neil Campling, head of TMT research at Mirabaud Equity Research. “The Twitter board has been taken hostage and only itself is to blame for this mess. No other buyers will come forward – if Musk decides he’s still interested he can state his price and it won’t be higher.

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