Elon Musk’s $44 billion takeover of Twitter is looking increasingly unlikely.
Twitter (TWTR) – Get Twitter Inc. Report shares slumped lower Friday following a report from the Washington Post that suggested Elon Musk’s $44 billion takeover bid for the group is in “serious jeopardy”.
The report, which appears to reply heavily on sources inside the Tesla CEO’s camp, says Musk remains convinced that Twitter is not being forthright with respect to its calculations of spam or fake accounts on the micro-blogging website. He also found support from Texas Attorney General Ken Paxton, who has echoed Musk’s call for more data to support its fake account claims and launched special probe into the company last month.
Musk, who waived his right to due diligence on the deal when it was unveiled earlier this spring, has consistently said that Twitter is refusing to co-operate by not sharing its calculations of fake accounts, while Twitter said it stood by its earlier filings with the Securities and Exchange Commission, which suggest less than 5% of total accounts are spam or fake.
The Wall Street Journal reported in June that as many as 70% of Musk’s nearly 100 million followers are spam, fake or inactive, citing data from audience-research software group SparkToro LLC.
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The Post said Musk could take “drastic action” with respect to the deal soon, but noted that the legal entanglements, as well as the $1 billion break-up fee tied with the proposed takeover, add another layer of complexity to the Tesla CEO’s challenge.
Musk accused Twitter of being in a “clear material breach” of its merger agreement for failing to provide the fake account data last month and threatened his “right to terminate the merger agreement” as a result. Musk had previously said there is “some chance” the number of fake and bot accounts “might be over 90% of daily active users”, but provided no proof for his assertion.
Twitter shares were marked 4% lower in pre-market trading to indicate an opening bell price of $37.35 each, a level that is 31.2% south of Musk’s “best and final” offer of $54.20 per share for the group.
