{"id":1474235,"date":"2022-05-13T10:59:52","date_gmt":"2022-05-13T14:59:52","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1474235"},"modified":"2022-05-13T10:59:55","modified_gmt":"2022-05-13T14:59:55","slug":"elon-musk-puts-44-billion-twitter-buyout-on-hold","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/elon-musk-puts-44-billion-twitter-buyout-on-hold\/","title":{"rendered":"Elon Musk Puts $44 Billion Twitter Buyout on Hold"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Felon-musk-puts-44-billion-twitter-buyout-on-hold%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1474235&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><\/div>\n<p>By Nivedita Balu and Kenneth Li<\/p>\n<p>(Reuters)\u2014Elon Musk tweeted on Friday that his $44 billion cash deal for Twitter Inc was &#8220;temporarily on hold&#8221; while he waits for the social media company to provide data on the proportion of its fake accounts.<\/p>\n<p>Twitter shares initially fell more than 20% in premarket trading, but after Musk, the chief executive of electric car market Tesla Inc, sent a second tweet saying he remained committed to the deal, they regained some ground.<\/p>\n<p>The shares were down 10% to $40.50 in morning trading on Friday, a steep discount to the $54.20 per share acquisition price.<\/p>\n<p>Musk, the world&#8217;s richest person, decided to waive due diligence when he agreed to buy Twitter on April 25, in an effort to get the San Francisco-based company to accept his &#8220;best and final offer.&#8221; This could make it harder for him to argue that Twitter somehow misled him.<\/p>\n<p>Since then, technology stocks have plunged amid investor concerns over inflation and a potential economic slowdown.<\/p>\n<p>The spread between the offer price and the value of Twitter shares had widened in recent days, implying less than a 50% chance of completion, as investors speculated that the downturn would prompt Musk to walk or seek a lower price.<\/p>\n<p>&#8220;Twitter deal temporarily on hold pending details supporting calculation that spam\/fake accounts do indeed represent less than 5% of users,&#8221; Musk told his more than 92 million Twitter followers.<\/p>\n<p>Twitter is planning no immediate action as a result of Musk&#8217;s comment, people familiar with the matter said. The company considered the comment disparaging and a violation of the terms of their deal contract, but was encouraged by Musk subsequently tweeting he was committing to the acquisition, the sources added.<\/p>\n<p>There was no immediate reaction from the investors that Musk tapped last week to raise $7.1 billion in funding.<\/p>\n<p>Spam or fake accounts are designed to manipulate or artificially boost activity on services like Twitter. Some create an impression that something or someone is more popular.<\/p>\n<p>Musk tweeted a Reuters story from ten days ago that cited the fake account figures. Twitter has said that the figures were an estimate and that the actual number may be higher.<\/p>\n<p>The estimated number of spam accounts on the microblogging site has held steady below 5% since 2013, according to regulatory filings from Twitter, prompting some analysts to question why Musk was raising it now.<\/p>\n<p>&#8220;This 5% metric has been out for some time. He clearly would have already seen it\u2026 So it may well be more part of the strategy to lower the price,&#8221; said Susannah Streeter, an analyst at Hargreaves Lansdown.<\/p>\n<p>Representatives for Musk did not immediately respond to requests for comment from Reuters.<\/p>\n<p>Tesla&#8217;s stock rose 4% on Friday morning. The shares have lost about a quarter of their value since Musk disclosed a stake in Twitter of April 4, amid concerns he will get distracted as Tesla&#8217;s chief executive and that he may have to sell more Tesla shares to fund the deal.<\/p>\n<p>There is plenty of precedent for a potential renegotiation of the price following a market downturn. Several companies repriced agreed acquisitions when the COVID-19 pandemic broke out in 2020 and delivered a global economic shock.<\/p>\n<p>In one instance, French retailer LVMH threatened to walk away from a deal with Tiffany &#038; Co. The U.S. jewelry retailer agreed to lower the price by $425 million to $15.8 billion.<\/p>\n<p>Acquirers seeking a get out sometimes turn to &#8220;material adverse effect&#8221; clauses in their merger agreement, arguing the target company has been significantly damaged.<\/p>\n<p>But the language in the Twitter deal agreement, as in many recent mergers, does not allow Musk to walk away because of a deteriorating business environment, such as a drop in demand for advertising or because Twitter&#8217;s shares have plunged.<\/p>\n<p>Musk is contractually obligated to pay Twitter a $1 billion break-up fee if he does not complete the deal, and the language in the deal contract appears to cap any damages that Twitter can seek from Musk to that level.<\/p>\n<p>But the contract also contains a &#8220;specific performance&#8221; clause that a judge can cite to force Musk to complete the deal.<\/p>\n<p>In practice, acquirers who lose a specific performance case are almost never forced to complete an acquisition and typically negotiate a monetary settlement with their targets.<\/p>\n<p>&#8220;The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us and the Street and now sends this whole deal into a circus show with many questions and no concrete answers as to the path of this deal going forward,&#8221; Wedbush analyst Daniel Ives wrote in a note.<\/p>\n<p>DEFEAT THE BOTS<\/p>\n<p>Musk has said that if he buys Twitter he &#8220;will defeat the spam bots or die trying&#8221; and has blamed the company&#8217;s reliance on advertising for why it has let spam bots proliferate.<\/p>\n<p>He has also been critical of Twitter&#8217;s moderation policy and has said he wants Twitter&#8217;s algorithm to prioritize tweets to be public and was against too much power on the service to corporations that advertise.<\/p>\n<p>Nevertheless, Musk is targeting advertising revenue to more than double by 2028, according to slides he presented to investors that were reported by the New York Times.<\/p>\n<p>Ads are expected to make up about 45% of Twitter&#8217;s total revenue by that time, down from nearly all of its revenue today, according to the investor presentation.<\/p>\n<p>Earlier this week, Musk said he would reverse Twitter&#8217;s ban on former U.S. President Donald Trump when he buys the social media platform, signaling his intention to cut moderation.<\/p>\n<p>(Reporting by Nivedita Balu in Bengaluru and Ken Li in New YorkAdditional reporting by Greg Roumeliotis in New YorkEditing by Alexander Smith and Nick Zieminski)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Nivedita Balu and Kenneth Li (Reuters)\u2014Elon Musk tweeted on Friday that his $44 billion cash deal for Twitter Inc was &#8220;temporarily on hold&#8221; while he waits for the social<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1474235","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1474235","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1474235"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1474235\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1474235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1474235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1474235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}