Musk says Twitter deal ‘cannot move forward’ without more information
By Lauren Hirsch and Adam Satariano
Elon Musk raised further doubts about the future of his $44 billion acquisition of Twitter on Tuesday, saying “this deal cannot move forward” until he gets more details about the volume of spam and fake accounts on the platform.
Musk, who is carrying out a public tweet-by-tweet negotiation for the influential social media platform, has latched onto the issue of fake accounts in recent days, in a move that some analysts figure is an attempt to drive down the acquisition price or walk away from the deal altogether.
Twitter has long said in regulatory filings that fewer than 5% of its accounts are fake — a figure Musk says is hard to believe. In a tweet published at 3:32 a.m. Eastern time Tuesday, Musk said the figure could be well above 20%, without providing information to support the claim.
“My offer was based on Twitter’s SEC filings being accurate,” Musk said in the message.
When a Twitter user replied that the volume of fake, bot and spam accounts could account for more than half of all Twitter accounts, Musk responded: “Exactly.”
The tweets Tuesday built off similar remarks by Musk at a technology conference in Miami on Monday. Musk, the world’s richest man, said striking a deal for Twitter at a lower price was “not out of the question” considering the questions about spam and fake accounts.
“The more questions I ask, the more my concerns grow,” Musk said at the event. “So you know, at the end of the day, acquiring it has to be fixable with a reasonable time frame and without revenues collapsing along the way.”
Twitter’s shares fell 8% Monday to close at $37.39. That is far below the $54.20 a share that Musk agreed to pay last month to buy the social media company. It is also below where Twitter traded before Musk initially revealed that he had bought a big stake in the company, the opening move in what has become an increasingly convoluted takeover saga.
In premarket trading, Twitter’s shares slipped further, falling 2%.
The company said in a statement accompanying a regulatory filing Tuesday that it was “committed to completing the transaction on the agreed price and terms as promptly as practicable.” In the filing, which explains the background and rationale for the deal, Twitter said that “if the merger is not completed, and depending on the circumstances that cause the merger not to be completed, the price of our common stock may decline significantly.”
Musk, who also leads the electric automaker Tesla and rocket company SpaceX, has unleashed confusion over the state of the deal. On Friday, he tweeted that his purchase of Twitter was “temporarily on hold” until he could get more details about the volume of spam and fake accounts on the platform. He later followed up saying he was still “committed” to the deal.
Twitter executives have become targets of Musk.
On Monday, Parag Agrawal, Twitter’s CEO, posted a lengthy thread detailing how the company calculates its number of bots. He said the company had shared an “overview of the estimation process with Elon a week ago.” Musk responded to the thread with a poop emoji.
Last month, Musk went after Twitter’s top attorney who oversees the platform’s content moderation policies. Musk’s supporters followed his lead by posting a flood of abuse at the company executive.
Musk did not immediately respond to a request for comment. Twitter declined to comment.
Tech company stocks have taken a beating since Musk first announced his acquisition of Twitter earlier this month. Shares of Tesla, which are Musk’s main source of wealth, have fallen almost 30%.
Renegotiating a deal would not be easy. In addition to a $1 billion breakup fee, Musk’s deal with Twitter includes a “specific performance clause,” which gives the company the right to sue him and force him to complete the deal so long as the debt financing he has corralled remains intact.
But Musk has also created very public headaches for Twitter. Over the weekend, he tweeted that Twitter’s legal department had “called to complain” that he violated a nondisclosure agreement discussing its bot sample size of 100. Musk’s deal with Twitter also has a nondisparagement clause that prohibits him from tweeting negatively about the transaction.
The two sides have so far continued as if there is a deal. Teams for both sides held a previously scheduled meeting Friday. (Twitter confirmed the meeting was “part of the transaction planning process.”) On Friday, Bret Taylor, Twitter’s chair, tweeted, “We remain committed to our agreement.”