FP StaffJul 08, 2022 13:26:36 IST
Elon Musk may not be able to fund his deal with Twitter, putting the Elon Musk-Twitter deal in jeopardy. Although Musk and his team would have people believe that the takeover bid will fall through because of Twitter not showing its data on fake and spam accounts on the platform, people closely involved with the deal have revealed that a lot of it boils down to the fact that Musk has been shaken a little given Tesla’s drop in valuation.
Musk’s team also thinks it won’t be able to confirm data about the number of fake and spam accounts on Twitter and has stopped certain talks around funding the acquisition, the report said.
Musk reached a deal to buy Twitter for $54.20 a share, a 38% premium to Twitter’s closing stock price on April 1, when the billionaire revealed he owns more than 9% of Twitter. Musk, who also leads Tesla and SpaceX, says Twitter isn’t adhering to principles of free speech and he thinks it would best if the company became private.
After Twitter’s stock started to fall, Musk said the deal couldn’t move forward until Twitter handed over more information about the number of spam and fake accounts on the platform. Musk said that understanding the number of fake accounts is part of evaluating Twitter’s business, which makes most of its money from ad sales. Even though Musk said a lower sales price isn’t out of the question, Twitter has said it doesn’t intend to lower the price. The company also reportedly provided Musk with a trove of data.
Elon Musk had initially planned to leverage a portion of his shares of Tesla’s stock to finance his bid to buy Twitter. However, given how Tesla’s new plants in Germany and Texas have turned out to be “money furnaces”, requiring billions of dollars to set up and operate, Musk and his team have stopped engaging in funding discussions for the $44 billion deal.
However, there is a chance that Musk may indeed go through with the acquisition at a much lower valuation. Each time news erupts that the Musk-Twitter deal may be off, Twitter’s stock price drops significantly. This time around, when news broke that the deal is in serious jeopardy, Twitter’s stock fell by four per cent.
Daniel Ives, an analyst with Wedbush Securities, said in a note Thursday that his firm believes there’s a 60 per cent chance that the deal will happen with a renegotiated price in the range of $42 to $45 per share. There’s also a 35 per cent chance that Musk will still walk away from the deal, pay the breakup fee and likely battle it out in court with Twitter’s board.
Source by www.firstpost.com
