“Twitter deal is temporarily on hold with the pending details supporting the account that spam/accounts already account for less than 5% of users,” Musk On Twitter, link to the Reuters article Quote from last week Twitter profile. About two hours later, he added, “I’m still committed to the acquisition.”
Spam bots, accounts promoting cryptocurrency scams and seeking to exploit vulnerable users, have long been a nuisance to the tech mogul who regularly encounters impersonators in his activity on the site.
But his public announcement was an unusual and unexpected maneuver at this point in the negotiations, according to financial experts and people familiar with the negotiations who spoke on the condition of anonymity to discuss sensitive matters. The deal was expected to close in the next three to six months, but Friday’s tweets may represent an attempt by Musk to return to the negotiating table to buy Twitter for less than previously agreed.
It also sent Tesla’s stock, which had fallen sharply this year, soaring, while Twitter faltered. Musk owns a large stake in Tesla and has put billions of dollars of his personal wealth into financing the deal. Friday’s price hike allowed Musk to recoup some of his net worth, while lowering the market value of the company he’s seeking to buy.
Twitter shares fell about 10 percent on Friday, while Tesla shares rose about six percent. Investors in the electric car industry, led by Musk, were concerned about the billionaire taking advantage of his stake to fund the Twitter deal.
Musk is chilling with concern that there may be more spam out there than he thinks may represent an attempt to launch a clause in the contract that would allow the deal to be canceled if an unexpected event significantly hurts Twitter’s business prospects, according to legal experts and people close to the deal.
However, at least one person familiar with the negotiations questioned the impact of Musk’s strategy. “We haven’t seen a shred of evidence that the deal is pending,” said the person, who spoke on the condition of anonymity to describe the discussions. “Things continue today as they were yesterday.” The person said robots would be the subject of “routine” discussion of such a deal.
“Anyone trying to predict how this might happen is an idiot,” Urska Velikunga, a professor of law at Georgetown University, said of the saga.
Musk and Twitter have not commented on this article.
Twitter has continued to plunge into more administrative chaos this week, with CEO Parag Agrawal sacked Two senior representatives Announcing a hiring freeze. On Friday, Agrawal wrote on Twitter that he needed to cut costs due to the macroeconomic environment. “I will not use the deal as an excuse to avoid making important decisions about the company’s health, nor will I use it for any Twitter leader,” he said.
Musk’s statement that the deal was pending was likely to draw the attention of securities regulators, who would examine whether his public statements about the deal while actively pursuing the company would conflict with securities laws.
Musk tends to loud statements on Twitter, where he has more than 90 million followers, which has led to SEC scrutiny. The Terms of the deal It requires a $1 billion break-up fee, though his tweet left some thought as to whether he was seeking to circumvent that cost. Securities law experts said Musk’s retreat at this point could lead to a protracted and messy legal battle, leaving the tech mogul with costs that outweigh the withdrawal penalty.
Prior to the tweet, Musk was already looking for additional investors to buy in as a market slump put pressure on his funding. Advisers close to Musk, who spoke on condition of anonymity due to ongoing discussions, said the change was likely a negotiating tactic, but it also signals the potential buyer’s remorse.
Tesla has lost about $400 billion in market value since Musk’s interest in Twitter became public in April, blowing a hole in his acquisition plans at a time when he set aside $21 billion of his fortune to fund the purchase. Musk had planned to buy Twitter with a combination of loans and stock commitments, cashing in on much of his stake in the most valuable automaker, from which he derives most of his fortune.
His net worth, which makes Musk the world’s richest man, has fallen by nearly $50 billion in recent weeks, according to Forbes magazine. wealth index. Tesla stock has lost nearly 30 percent of its value in the past month alone. Last week, Musk revealed more than $7 billion in funding from sources including investment firms, Oracle founder Larry Ellison, crypto exchange Binance, Qatar’s sovereign wealth fund, and Saudi Prince Alwaleed bin Talal.
Musk is now looking for additional investments beyond what he initially planned, due to the economic downturn and a weak Tesla stock, according to people familiar with the negotiations who spoke on the condition of anonymity to discuss sensitive matters.
Partly due to the economic downturn, Musk and the bankers involved in the deal have come under pressure to strengthen partners, including the owner of Yahoo Apollo Global Management, which is expected to provide more than $1 billion in funding with a handful of partners, according to one of the people.
CNBC I also mentioned On Thursday, angel investor Jason Calacanis had investors queuing up for Musk’s property show. Potential investors who spoke with The Washington Post said bid interest remained high due to the belief that Musk would do the trick about his investment, despite declaring Twitter’s economics was not his concern.
It wouldn’t be the first time that Musk had tweeted something that was moving the markets, and sometimes this practice caused trouble. Most famously, he tweeted in 2018 that he had secured funding to take Tesla private at $420 a share. The SEC fined him $20 million. Musk also tweeted that Tesla is overrated, and tweeted a poll asking the public if he should sell a portion of his stake in Tesla.
“Doing this in a tweet rather than on a file is preposterous, and it sends the market into a circus show,” said Dan Ives, analyst at Wedbush Securities.
The Twitter bot problem is nothing new to Musk. He pointed to the clearance of the social networking site From spam botsor bot accounts that often promote products or schemes, as one of his main concerns to improve Twitter.
“If our Twitter show works, we’ll defeat the spam bots or die trying!” He tweeted last month. In a radio interview this week, he reiterated that the company needs to crack down on bots and build trust with users.
Experts explained how Musk could seek to use the bot problem to renegotiate the deal price. “I can only say that from a merger perspective, it’s a fairly thin reed to scrap a deal,” said Ann Lipton, professor of law at Tulane University. “Sometimes this kind of thing is used as a basis for renegotiating the price of a deal, but then again, unless the issue has a much greater financial impact on Twitter than has been reported, it’s not a solid ground for that either.”
Lipton said issues involving user accounts are usually scrutinized before the two sides agree on a deal. The terms of Musk’s purchase of Twitter allow him to tweet about his acquisition “as long as such tweets do not detract from” the company or any of its representatives.
Filikunga, a professor of law at Georgetown University, said Musk has put Twitter between a rock and a hard place. If Musk walks away from the deal, Twitter will have to fight an expensive and lengthy legal battle to make up for the damages that Musk has inflicted on the company. If Twitter’s board renegotiates a lower price with Musk, he will likely face shareholder lawsuits alleging the company took an underprice.
Musk launched his ownership bid with the goal of promoting “freedom of speech” on the site, a situation that some employees fear could lead to a rollback of the safety policies the company has put in place to protect users online. In recent weeks, Musk has warned that he is not yet the owner of Twitter, though he has made clear plans for the social media service, such as restoring former President Donald Trump’s account, which was blocked after January 6, 2021. And attack on The US Capitol Building.
If the Twitter acquisition is completed, the company will focus heavily on software engineering and design, information security, and server hardware. Posted in Tweet He added last week: “Also, the work ethic expectations will be extreme, but it’s much lower than I demand of myself.” He said On the top With the Financial Times on Tuesday that Trump’s ban was a “morally bad decision, to be clear, a fool in the extreme.”
The deal can also be affected by external factors, such as regulatory scrutiny from the Federal Trade Commission or the Securities and Exchange Commission. The Wall Street Journal reported on Wednesday that the Securities and Exchange Commission was investigating Musk Late notification He bought a 5 per cent stake in Twitter.
the post Previously mentioned Such a delay could earn him $156 million. Musk has leveraged much of his Tesla stock as collateral for his loans, making the recent economic downturn a particular problem for his bid. Tesla has warned of the risks it faces due to the amount of Tesla stock that Musk committed as collateral.
Tesla stock traded below $770 on Friday, a slight recovery from the previous week, But well below the more than $1,100 mark from early April. Analysts said a further drop of several hundred dollars could lead to stipulations that would force Musk to sell some shares.
At some point last year, he committed more than half of his shares as collateral, according to financial filings. Since showing Twitter will only increase that exposure, Musk has faced pressure to reduce his commitment to equality, according to people familiar with the matter who spoke on the condition of anonymity to discuss sensitive matters.
In its annual filing, Tesla has been open about the potential risks. According to the document, “If Elon Musk is forced to sell shares of our common stock that he has pledged to secure certain personal loan obligations, such sales could cause our stock price to fall.”
“We are not a party to these loans,” the company wrote. Tesla wrote that if its stock price fell, banks might force Musk to sell Tesla shares to meet his loan obligations. This can further reduce inventory. “It became a vortex,” Ives said.
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