Elon Musk suspends purchase of Twitter, shares plunge

Elon Musk has suspended his deal to buy Twitter. The Tesla boss wrote on Twitter on Friday that he first wanted to wait for calculations to show that accounts with no real users behind them actually accounted for less than five percent. The short message service published this estimate earlier in the week.

Shares of Twitter fell rapidly by almost a quarter in premarket trading after Musk’s tweet, to trade around $34.50. That is a far cry from the $54.20 per share Musk had promised shareholders. The newspaper closed Thursday at $45.08, a sign of investor skepticism that Musk is really going through with the deal.

Tesla CEO Elon Musk had agreed with Twitter’s board of directors on a deal worth around $44 billion. However, he is still dependent on enough shareholders who want to sell his shares to him. Twitter and Musk previously wanted to complete the acquisition by the end of the year. In recent months, he has already bought a good nine percent stake in Twitter on the stock exchange.

Twitter Agreement Temporarily Suspended Pending Details Supporting Estimate That Fake/Spam Accounts Make Up Less Than 5% Of Usershttps://t.co/Y2t0QMuuyn

— Elon Musk (@elonmusk) May 13, 2022

The fact that there are fake accounts on Twitter should not have come as a surprise to Musk. He had stated that one of his goals for the purchase was to ban profiles that are used, for example, to send spam messages from the platform. It’s unclear whether Elon Musk could use the allegation that Twitter provided inaccurate information about the number of fake accounts to get out of the deal or reduce his offer. He had relinquished customary control of the Twitter books before the deal.

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Twitter and Elon Musk agreed to a $1 billion fine if either party called off the deal. But experts didn’t think that meant Musk could simply change his mind without explanation and walk away with $1 billion.

In recent days, other problems for the deal have also become apparent. Musk originally wanted to borrow about $12 billion of the purchase price, which would be secured by his Tesla shares. But after Tesla’s stock price plummeted from around $1,000 to just $728, this plan turned increasingly out of his favor. The Bloomberg financial service reported Thursday that Musk is looking at alternative sources of financing instead of the equity-backed loan.

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Categories: Technology
Source: vtt.edu.vn

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