The world’s richest man is thinking twice.
Elon Musk is currently holding off on his highly publicized purchase of Twitter for $44 billion.
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The chief executive officer of SpaceX and Tesla announced on May 13 that the deal was temporarily on hold pending further information on spam or fake accounts.
This effectively hits pause on the largest acquisition financing ever put forward for one person, as well as one of the biggest leveraged buyouts of a listed company.
Musk cited how fake or spam accounts representing 20 percent or a fifth of Twitter users is four times higher than what the social network claimed and could even be much higher.
“My offer was based on Twitter’s Securities and Exchange Commission filings being accurate. Yesterday, Twitter’s [chief executive officer Parag Agrawal] publicly refused to show proof of less than 5 percent. This deal cannot move forward until he does,” Musk posted on May 17.
Agrawal, meanwhile, posted a thread detailing how Twitter arrived at its projection of fake or spam accounts.
“Our actual internal estimates for the last four quarters were all well under five percent–based on the methodology outlined above. The error margins on our estimates give us confidence in our public statements each quarter,” Agrawal wrote.
Analysts expect that Musk’s statements mean he is trying to drive down the acquisition price or end the transaction altogether.
Backing out, if ever, would force Musk to pay Twitter a $1-billion termination fee as part of the agreement.
Moreover, a “specific performance clause” would allow the company to sue and compel him to complete the deal while the debt financing he arranged remains intact.
Banner Photo by NORAD and USNORTHCOM Public Affairs via Wikimedia Commons
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