Elon Musk’s $44 billion deal to buy Twitter is now in serious doubt, according to the Washington Post, which reported Thursday the billionaire’s team could pursue a massive change in strategy amid concerns about spam and fake accounts.
Talks between Musk’s team and investors who could help him finance the deal have slowed recently because the team feels Twitter has not been “cooperative” in sharing information about fake accounts, an anonymous source with knowledge of the discussions told the Post.
A source also told the Post there could soon be a major shift in Musk’s approach to close the deal, but it’s not clear what that change may be.
The setback is reportedly over concerns about how many spam accounts populate Twitter.
The company has long stated fake and spam profiles make up less than 5% of users, but Musk began expressing skepticism with that figure after he agreed to buy Twitter, and his team has now determined Twitter’s claim is unverifiable, according to the Post.
Neither Musk nor Twitter immediately responded to requests for comment from Forbes.
WHAT TO WATCH FOR
If either Musk or Twitter pull out of the deal, the terminating party will be required to pay a $1 billion penalty, though the issue would likely result in a legal battle before any fine is paid. If Musk breaches the agreement to buy Twitter, the company could also sue him for “specific performance,” and try to force him in court to follow through with the purchase.
On April 25, the Twitter board accepted Musk’s unsolicited bid to purchase 100% of the company and take it private at a valuation of $54.20 a share, a deal that followed weeks of maneuvering by both the company and the world’s richest person. Musk on May 13 said the deal was being put “on hold” until he received more data on fake and spam accounts on the platform, though he claimed to still be “committed to acquisition.” To ease these concerns, Twitter eventually agreed to give Musk’s team—which chose not to do extensive due diligence when the deal was struck—access to user data. Twitter’s stock has also plummeted over the past few months amid doubt over whether the deal will close—a problem that’s been exacerbated by a broader tech selloff on the stock market. Twitter ended the day Thursday at $38.79 a share, placing the company’s market cap at less than $30 billion. Musk’s decision to buy Twitter came after he frequently criticized the social network for its moderation policies, claiming it unnecessarily censors non-mainstream viewpoints. He has vowed to allow all speech permissible by law on the platform once he becomes owner.
A bombshell Insider article published Wednesday revealed Musk quietly fathered twins in November with an executive at Neuralink, a company he cofounded and serves as CEO of, bringing his number of known living children to nine. Musk responded to the report Thursday by tweeting: “Doing my best to help the underpopulation crisis.”
Elon Musk’s deal to buy Twitter is in peril (Washington Post)
By Nicholas Reimann, Forbes Staff