Elon Musk is seen hours before pausing his $44B Twitter takeover
EXCLUSIVE: Elon Musk is seen hours before pausing his $44B Twitter takeover as Trump says there’s ‘no way’ he would buy it at ‘such a ridiculous price’ and has not already walked away because of $1b ‘break-up’ fee
- Tesla CEO Elon Musk was seen going to a dinner party at the Beverly Hills Hotel on Thursday evening, just hours before he put his Twitter acquisition on hold
- Musk said he was still committed to the $44 billion purchase of the social media company pending an investigation into how many spam accounts are on the site
- Former President Donald Trump was among many who speculated that Musk put the buyout on hold in the hopes of negotiating a better deal
- Trump said it was ‘ridiculous’ for Musk to pay $54.20 per share and slammed the $1 billion break-up fee Musk would pay Twitter if the deal falls apart
- Along with the break-up fee, Twitter could file a lawsuit against the world’s richest man for a breach of contract
- Twitter CEO and board member Parag Agrawal has insisted that he still expects the $44 billion acquisition of the company to close
Elon Musk was seen attending a private dinner party in Beverly Hills just hours before hitting pause on his $44 billion Twitter acquisition as former President Donald Trump weighed in on the deal.
Musk was out and about in Los Angeles on Thursday where he was spotted being escorted by three security guards into the Beverly Hills Hotel for a dinner party.
The world’s richest man appeared to be glued to his phone as he would, within hours of the party, shock Wall Street by announcing his deal to buy Twitter would be put on hold.
Trump, commenting on his Truth Social platform on Friday, suggested that Musk is looking to negotiate a better deal to buy Twitter after agreeing to pay $54.20 per share.
The former US president said the only reason the Tesla CEO had not called off the Twitter deal yet was because of the $1 billion break-up fee.
‘There is no way Elon Musk is going to buy Twitter at such a ridiculous price, especially since realizing it is a company largely based on BOTS or Spam Accounts,’ Trump wrote as he added jabs at the rival social media company.
‘If it weren’t for the ridiculous Billion Dollar breakup fee, Elon would have already been long gone,’ he added.
Tesla CEO Elon Musk (pictured) was seen going to a dinner party at the Beverly Hills Hotel on Thursday evening, just hours before he put his Twitter acquisition on hold
The world’s richest man appeared to be glued to his phone as he entered the building escorted by three security guards
Musk said he was still committed to the $44 billion purchase of the social media company pending an investigation into how many spam accounts are on the site
Musk wore a dark cap, green shirt and black pants and shoes as he attended the party
Should he bail out on the deal, Musk risks paying a $1 billion break-up fee to Twitter and could also be sued by the social media company for breach of contract
Former President Donald Trump was among many who speculated that Musk put the buyout on hold in the hopes of negotiating a better deal
This week, Musk has also sparked fierce debate after saying he would allow Trump back on Twitter if and when he takes the reins, in line with his previous declarations that he planned to err on the side of free speech rather than bans and censorship.
Trump has repeatedly stated that he has no plan to go back to Twitter after he was removed from the platform following the January 6 Capitol riot.
Musk’s surprise tweets early Friday sent Twitter stock plunging in the pre-market, as analysts speculated that Musk is trying to negotiate a lower price for the deal or pull out completely.
Citing a week-old regulatory filing from Twitter, Musk claimed that he wanted to pause the deal to verify that false or spam accounts represented fewer than 5 per cent of the company’s 229 million users during the first quarter.
Backpedaling a few hours later, Musk tweeted that he was ‘still committed’ to the acquisition.
Twitter CEO and board member Parag Agrawal has insisted that he still expects the deal to go through as the company prepare for the transfer of power.
In a lengthy Twitter thread on Friday, Agrawal wrote: ‘While I expect the deal to close, we need to be prepared for all scenarios and always do what’s right for Twitter.’
Agrawal also addressed his move on Thursday to fire two top Twitter execs, saying that he is ‘accountable for leading and operating Twitter, and our job is to build a stronger Twitter every day.’
If Musk walks away from the deal, Musk would not only be on the hook for a $1 billion termination fee, he could also be sued by Twitter for breach of contract.
A senior M&A lawyer familiar with the deal told CNBC that Twitter could also sue Musk if he were to try and abandon the deal simply because he felt he overpaid.
Like Trump, others have speculated that Musk’s surprise move on Thursday came as a result of trying to renegotiate a better deals as Twitter stocks
have dropped since the buyout was set at $54.20 per share last month.
‘This is probably a negotiation tactic on behalf of Elon,’ Toni Sacconaghi, Bernstein senior research analyst, told CNBC on Friday. ‘The market has come down a lot. He’s probably using the guise of true active users as a negotiation ploy.’
Trump, pictured last week, said it was ridiculous for Musk to pay $54.20 per share. Musk has said he would allow Trump back on Twitter once he’s CEO
Twitter CEO and board member Parag Agrawal (left) has insisted that he still expects Elon Musk’s $44 billion acquisition of the company to close
Shares of the social media company fell as much as 25 percent in premarket trading this morning, continuing a massive downward trend since his takeover bid was accepted by Twitter’s board on April 25.
It is not clear what the legal effect of his tweet was, and some analysts were baffled that he announced the move on Twitter rather than a regulatory filing.
Wedbush analyst Dan Ives called Musk’s tweet ‘bizarre’ and said that it ‘now sends this whole deal into a circus show with many questions and no concrete answers.’
‘Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,’ Ives wrote in a note.
‘If Musk does decide to still go down the deal path a clear renegotiation is likely on the table,’ he added.
Twitter’s share price has been declining since April 25 in a sign that Wall Street is not confident that the deal will be completed at the announced $44 billion price
Tesla shares have been under pressure amid concern that Musk will have to sell more of his holdings in the company to finance his Twitter takeover
Meanwhile, Tesla shares, against which Musk has secured $6.25billion in funding for the acquisition, were up about 5 percent early Friday.
Tesla stock has been slumping, and is down 28 percent in the past month, amid investor concern that the Twitter deal will divide Musk’s attention, and that financing issues would force him to dump more of his Tesla holdings.
The decline in Tesla’s share price has increased concerns about Musk’s ability to finance the Twitter deal. At Thursday’s closing price, Musk would have to put up more than a quarter of his Tesla shares to secure the $6.25 billion margin loan.
Analysts questioned why Musk would suddenly express concern about Twitter’s estimate that 5 percent of accounts are fake, an estimate that the company has included in regulatory filings for years.
Susannah Streeter, an analyst at Hargreaves Lansdown, said: ‘This 5% metric has been out for some time. He clearly would have already seen it… So it may well be more part of the strategy to lower the price.
‘It’s going to be highly frustrating for many in the company given that a number of senior executives have already been laid off,’ she said.
Yesterday, it was also revealed the Tesla CEO’s Twitter purchase was being investigated by US regulators after he delayed reporting the buy – and thus failed to provide sufficient warning that a takeover bid was looming.
The 50-year-old’s first move towards buying Twitter was his purchase of a 9.2 percent stake in the tech company in mid February.
But he did not disclose his purchase to the Securities and Exchange Commission (SEC) until at least 10 days later, on April 4.
Any investor who crosses a 5 percent stake must file a form with the SEC within 10 days. It serves as an early sign to stakeholders that a big investor could seek to control the company.
Musk’s April 4 filing also characterized his stake as passive, meaning he did not plan to take over Twitter or influence its management or business.
The next day, however, he was offered a position on Twitter’s board, and a couple of weeks later, the world’s richest man had clinched a $44billion deal to buy the social media giant.
The SEC investigation was first reported on Wednesday by The Wall Street Journal.
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