The Twitter acquisition deal is souring with each passing day as Elon Musk is setting some tough conditions that the micro-blogging platform doesn’t seem to be quite interested in. In spite of that Twitter is quite optimistic about the successful acquisition as far as Musk sticks to his original commitment of $54.20 a share.
On Thursday, the Twitter stock surged up 3% after Bloomberg reported that the social media company assured employees that the Twitter acquisition deal with Elon Musk was proceeding as planned.
Despite Musk’s numerous tweets over the past week stating that he had put the deal “on hold” as he evaluates the percentage of bots accounts on the platform. Musk countered Twitter’s claim of only 5% bot accounts as he suspected that the percentage could be as high as 20%.
According to Bloomberg, Vijaya Gadde (Twitter’s top lawyer) told employees that there was no such thing as a deal “being on hold”. At the same time, Twitter emphasized the fact that it would not renegotiate the deal price. Musk earlier offered $54.20 per share or approximately $44 billion to Twitter in an all-cash deal. However, after the bots became a sticking point for Musk, he didn’t rule out the possibility of renegotiation.
A certain group of experts also believe that Musk’s change of heart could be due to the plummeting share value of Tesla since the deal was announced. Tesla’s market value has tanked by more than $400 billion during the market slump. Musk had planned to pledge more than $10 billion to secure financing for Twitter, but given the significant decline in Tesla’s stock price recently, he will have to pledge more shares for $10 billion.
Musk will have to cough up $1 billion in breakup fees if he decides to back off from the deal. Hence, Musk may be trying to find a legally acceptable excuse to avoid the breakup fee by claiming that Twitter has more bots than it officially claimed in its filings.
On one side Musk put on a brave face, on the other side, Twitter is also quite firmed in its assertion that Musk will buy the company at the agreed price. According to Bloomberg’s report, Ned Segal, Twitter’s chief financial officer, stated to employees that Twitter executives were still in contact with Musk and his team, and were working regularly to close the deal.
Top executives at Twitter are quite confident about sealing the deal at an agreed valuation. However, the stock market is behaving otherwise due to the tweets exchange between Elon Musk and Twitter CEO, Parag Agrawal, which clearly paints a widening gap between the parties.
At this time, Twitter’s future hangs in balance knowing the unpredicted nature of Elon Musk. It’s a tricky situation for Twitter for sure as its stock – already trading nearly 20% lower since the deal was announced – may crash further if the deal falls flat.
