In a tweet Friday morning, Musk abruptly announced that his deal to purchase the company was “on hold,” purportedly because he has not been able to ascertain whether Twitter’s estimates of spam accounts on its platform are accurate. In a follow-up tweet, he said he was “still committed” to the prospective purchase.
The spam-account issue, which has not figured prominently in coverage of the deal, could be a (rather thin) justification from Musk for walking away entirely with the justification that he was misled by the company. It’s also possible that by publicly waffling, he may be negotiating for a better price than the one he agreed to — a hefty $44 billion, a number many believe was too high.
The question of Musk’s financing has been a central one since he expressed interest in buying the company. After initial doubts that he was in a position to make the deal despite his massive personal wealth, Musk secured billions in loans from outside investors like Larry Ellison, reassuring Twitter’s board.
But in recent weeks, a swoon in the stock market — and tech stocks in particular — has worsened the financial climate. And Tesla has come out especially badly, with its value plummeting by about 30 percent in the last month. Investors understandably don’t seem to like the idea of Musk splitting his time between the electric-car giant, SpaceX, and Twitter. And perhaps Musk is beginning to realize that, even if attempting to turn around a vital yet financially shaky social-media company by turning it into a techno-utopian free-speech zone isn’t worth the trouble.
Musk would be on the hook for at least a previously negotiated $1 billion breakup fee if negotiations with Twitter collapse. But as CNBC reports, he may have to pay much more. Twitter would likely sue him for breach of contract if he walks away, and could extract billions more if they prove that he did so simply because he got cold feet.