The Tesla boss wants to take over the short message service Twitter.
(Photo: AP)
san francisco Tech billionaire Elon Musk has hinted he may try to squeeze the purchase price of Twitter. A deal at a lower bid is “not out of the question,” Musk said in a video interview at a conference on Monday. Twitter shares ended the day in US trading down a good eight percent at $37.38. That’s a far cry from the $54.20 per share that the head of electric car maker Tesla has so far promised Twitter shareholders.
Musk himself sent the stock plummeting over the weekend by declaring the deal to buy Twitter was “temporarily on hold.” He first wants to wait for calculations to show that accounts without real users actually make up less than five percent. It is still unclear whether Musk can put his agreement with the Twitter board of directors on hold from a legal point of view.
“The more questions I ask, the more worried I become,” Musk said during his conference appearance. He estimated that fake profiles accounted for at least a fifth of all Twitter accounts – but gave no basis for this. Musk had declined an in-depth review of the Twitter books prior to the takeover deal.
Earlier, Twitter CEO Parag Agrawal attempted to explain the service’s methodology in estimating the number of spam and bot accounts in a series of tweets. He also wrote that such estimates are difficult to make from outside the company. Musk countered with a poo emoji and asked, among other things, whether Twitter had tried simply calling users with suspicious-looking accounts.
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This idea was immediately ridiculed by experts. Twitter calls the number of 229 million daily users that the service can reach with its advertising. The fake accounts identified by Twitter have already been deducted from this number.
Dispute over bot accounts
Musk said at the conference that he believes a significantly higher proportion of bot accounts than reported would be serious misinformation. He put the expected share of bot accounts at 20 percent and more. The agreement with Twitter provides that the sides can withdraw from the deal in the event of massive deviations.
It’s not clear, however, whether grossly inaccurate Twitter account numbers would be accepted as sufficient grounds for the deal to be canceled in a dispute between Musk and Twitter over weight. The agreement provides for a $1 billion penalty if either side breaches the deal.
Wedbusch analyst Dan Ives suspected that the discussion about the bot accounts was a diversionary maneuver by Musk. He estimated the probability that the purchase would come about at less than 50 percent. “Twitter’s board of directors is in a difficult position,” Ives said.
If the deal fails, Musk could be required to pay $1 billion in damages. The consequences for Twitter are likely to be much more serious, Ives suspected. “The stock price is likely to go below $30,” Ives said.
Musk had agreed on a deal worth around $ 44 billion with the Twitter board of directors. But he is still dependent on enough shareholders wanting to sell him their shares. Twitter and Musk previously wanted to complete the acquisition by the end of the year. In the past few months, he has already bought a good nine percent stake in Twitter on the stock exchange.
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