Musk says $44 billion Twitter deal on hold over fake account data
Elon Musk tweeted Friday that his $44 billion cash acquisition of Twitter Inc.
Elon Musk tweeted Friday that his $44 billion cash acquisition of Twitter Inc. (TWTR.N) was “temporarily on pause” while he awaited the social media giant’s figures on the proportion of its fake accounts. Musk was alluding to the fact that he was awaiting Twitter’s figures about the proportion of fake accounts. Musk was referencing the fact that he was presently awaiting Twitter’s statistics on the number of fake accounts.
After Musk, the chief executive officer of the electric car market Tesla Inc (TSLA.O), tweeted for the second time that he remained committed to the acquisition, premarket trading for Twitter shares soared by more than 20 per cent. The price of $54.20 per share was paid to buy the stock, which was much more than the amount earned on Friday when the stock was sold for $40.71 per share.
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When Elon Musk, the richest man in the world, decided to acquire Twitter on April 25, he circumvented the due diligence process to convince the San Francisco company to accept his “best and last offer.” Musk now controls twenty per cent of all outstanding Twitter shares. This will certainly make it more difficult for him to claim that Twitter tricked him in the future. Since Elon Musk made his desire to acquire Twitter public, investors have been more anxious about the risk of a price hike and a probable economic slowdown. As a direct result, the stock values of several technology companies have fallen dramatically.
In recent days, the difference between the offer price and the value of a Twitter share has widened, indicating that the probability is less than fifty per cent. Investors are concerned that if the stock price continues to decrease, Elon Musk may be forced to abandon the acquisition or seek a lower price. You must continue reading. Musk posted the following message to the more than 92 million individuals who follow him on Twitter: “Twitter transaction now on hold for information supporting calculation that spam/fake accounts comprise less than 5 per cent of users.”
Musk said, “To find out, my team will perform a random sample of 100 followers” of the microblogging site, and he invited others to mimic the procedure and “see what you discover.” In addition, Musk suggested that everyone “replicate the procedure and observe the results.” If you choose to read this as “We have a good chance of obtaining an accurate estimate if we all work together,” you may read it as “If we all work together to identify the number of bots and duplicate users, we have a good chance of obtaining an accurate estimate via crowdsourcing.” This statement may alternatively be interpreted as “We have a high possibility of reaching an accurate estimate if we all work together.”
Musk said that he relied on Twitter’s public filings in response to a follower’s concern about why he did not do research before submitting a bid to purchase the firm. The follower questioned why Musk did not explore this before submitting a bid to acquire the firm. The follower queried why Musk did not do the research before making the offer, and he did not give an adequate response. Musk had said that he relied on Twitter’s public filings, which prompted a follower to react with a question. The follower’s question came in response to Musk’s remarks. After the terms of the deal have been fulfilled in line with the agreement Musk has signed with Twitter, he will be permitted to investigate the company’s business procedures. This is consistent with the conditions of the agreement between Musk and Twitter.
This is not to continue the current discussions nor to finish the required research; rather, it is to help him prepare for his takeover of Twitter. Twitter has no present plans to discipline Musk for his words, according to sources familiar with the situation. This information was generously provided by Twitter workers.
Elon Musk’s subsequent tweet announcing the transaction’s completion made the business ecstatic, even though the firm saw Musk’s first statement as insulting and a violation of the contract. According to people with privileged access inside the business, it was believed that the company commented. Musk allegedly attended a meeting on May 6 at Twitter’s headquarters as part of preparations for the takeover discussions. This visit seems to have been an essential part of the preparations.
Twitter’s Chief Executive Officer, Parag Agrawal, said, “While I anticipate the deal will materialize, we must be prepared for all outcomes.” “While I hope that the transaction will go through, “While I anticipate that the agreement will go through, “I anticipate that it will,” Agrawal said on Thursday that there would be future leadership changes, as well as the temporary suspension of the hiring process. The relevant reading for the topic at hand is Spam or fake accounts are established on social media networks such as Twitter to control the platform’s activities or artificially boost its use. Some individuals may mistakenly assume that a given product or person is more popular than it is.
Musk posted a 10-days-previously-published Reuters story. In the tweet, he mentioned the retrieved numbers from the fraudulent accounts. Twitter has said that these numbers are simply estimates, and the true number may be far higher. Since 2013, Twitter’s regulatory filings indicate that the estimated number of spam accounts on the microblogging network has stayed below five per cent of the total. Consequently, many industry analysts doubt why Musk is expanding it now.
“For quite some time, this approach for calculating 5 per cent has been accessible. It is logical to presume that he is already aware of it, given how evident it is… Therefore, cutting the price is likely less of a tactical issue and more of a strategic one.” Susannah Streeter, an analyst at Hargreaves Lansdown, made the following comments. Reuters’ inquiries for comment from representatives of Musk’s firm were not immediately greeted with a response.
Friday saw a five per cent increase in the value of Tesla’s shares. The value of the company’s shares has plummeted by almost a quarter as a consequence of Musk’s statement on April 4 that he was interested in Twitter. This is due to concerns that he would become distracted from his duties as CEO of Tesla and the possibility that he would need to sell further Tesla shares to fund the purchase. Significant historical data supports the potential of a price renegotiation after a market downturn. After the 2020 outbreak of COVID-19 shook the global economy, numerous companies renegotiated the prices of previously agreed-upon acquisitions.
As an example, the French retailing giant LVMH (LVMH.PA) recently threatened to sever ties with Tiffany & Co. The American jewellery retailer has agreed to a price cut of $425 million, bringing the total to $15.8 billion. In certain cases, acquirers seeking an exit may include “severe adverse effect” clauses in the merger agreement. These provisions indicate that the target company has sustained significant damage as a consequence of the acquisition and allow the acquirer to exit from the deal.
However, the wording in the Twitter sale agreement, which is typical of the language in many merger agreements over the last few years, does not empower Musk to back out of the acquisition owing to the poor economic climate. This causes both a reduction in advertising demand and a fall in the price of Twitter shares. Should Musk want to cancel the deal, Twitter has determined that he would be responsible for a one billion dollar termination fee. However, the contract also contains “specific performance” language, which a judge may use to force Musk to comply with the terms of the agreement.
In reality, acquirers that fail to defend a specific performance issue are rarely obliged to complete a transaction. This is because the case does not support the acquirer’s position. To finalize the acquisition, they are often obliged to negotiate a cash settlement with the targets of their takeover efforts. Musk has said that if he were to purchase Twitter, he would “kill the spambots or die trying,” and he attributes the rise of spambots to the company’s reliance on advertising. Here is Musk’s blog post where you may learn more about his Twitter goals.
In addition, he has expressed his discontent with Twitter’s moderation policies and said that he would want the algorithm of the network to prioritize messages for public distribution. This is something he has already stated. Musk said this week that if he acquired Twitter, he would lift the ban put on former U.S. President Donald Trump. He, therefore, signalled a willingness to limit the amount of moderation on the social media network.
Friday, Trump used his position to convey his ideas and feelings on the issue. Trump created Truth Social, an alternative social networking site. Trump said in a post that it is “impossible” for Elon Musk to purchase Twitter at such an absurd price, and he added that his website is better than Twitter. Trump said, “Since realizing that bots and spam accounts comprise the majority of Twitter’s user base, Elon Musk will never acquire the firm.” Twitter would never be acquired by Elon Musk.