Musk says Twitter deal could proceed only if these three issues are resolved
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A few months ago, Elon Musk surprised the internet (as the billionaire likes to do) with a $44 billion bid to buy out Twitter after earlier joining, and then shortly after, leaving, the Twitter board. However, the deal came to an unexpected halt when Musk doubted officially published Twitter statistics about fake accounts on the platform. Musk has three issues with Twitter deal and those will need to be resolved if the deal is to move forward.
After bidding $44 billion to make Twitter his private company, Elon Musk had a change of heart. Doubtful of the number of fake accounts on the social media platform, the multi-billionaire threatened to walk away from the deal if no accurate information was provided. This, of course, means he could face a fee of reportedly $1 billion for breaking the deal up.
Now, Musk has shared his three main issues concerning the buyout. Resolving them will mean the deal can move forward, it seems. Here’s what they are:
This was actually the main reason why the deal was put on hold to begin with. Musk was concerned that the actual number of fake accounts on Twitter was higher than what Twitter had reported. And therefore, he insists on more clarity on how many actual users (a.k.a real people) are using Twitter.
Twitter previously announced the number of fake bot accounts was below 5% of the daily active users on the platform, but Musk had an issue with that number. He also underlined that this is probably not what most people experience on Twitter.
So far, there hasn’t been a resolution on this quite important matter.
Well, well, it seems that multi-billionaires also have to take loans. The second issue Musk has is that there’s a pretty significant part of the funding that should come from bank loans. Pretty much, he committed to paying $33.5 billion in cash. He also received $7.1 billion in equity financing commitments from investors. The remainder is what will be loaned from banks.
“He also received $7.1 billion in equity financing commitments from investors.”
Musk may be a billionaire, but the majority of his wealth is in Tesla stock. He has now pledged billions in Tesla shares as collateral for those loans, but it seems he doesn’t like the situation that much.
How will this be resolved is somewhat unclear at the moment. And last but not least, Musk has to gain approval from Twitter’s shareholders for the deal to become reality. Investors are reportedly going to vote on the deal in late July or at the beginning of August.
As you might imagine, whether or not Musk will get shareholder support is a mystery. You know, he is actually being sued by some Twitter shareholders for the chaotic approach to the buyout deal, so some may not be in favor of him taking over.
As you can see, it’s not only the disputed number of bot accounts on Twitter that has made Musk second-guess the deal. Factors such as financing and shareholder approval seem to also play a significant role in whether or not we will see this deal completed.
However, the reported number of fake accounts is something that could be hard to resolve. Initially, when the dispute about the issue was getting a bit heated (on Twitter, of course, where else – and with curious choice of emojis from Musk), Twitter’s CEO, Parag Agrawal, underlined that in order to perform an external check on which accounts belonged to bots, Twitter would need to use private information. But Twitter doesn’t share such information, so it was, according to Agrawal, impossible to do the check.
Well, we’ll have to wait and see what happens, as things are starting to look like the deal might not take place in the end.
Questions & Answers
Q.What are the three main issues Elon Musk wants resolved before proceeding with the Twitter deal?
What are the three main issues Elon Musk wants resolved before proceeding with the Twitter deal?
Musk requires clarity on the number of fake accounts, needs to resolve funding issues related to bank loans, and must gain approval from Twitter's shareholders for the deal to move forward.
Q.Why is Elon Musk concerned about the number of fake accounts on Twitter?
Why is Elon Musk concerned about the number of fake accounts on Twitter?
Musk believes the actual number of fake accounts is higher than Twitter reported, which stated it was below 5% of daily active users. He insists on more clarity regarding real users.
Q.What is the problem with the funding for the Twitter acquisition?
What is the problem with the funding for the Twitter acquisition?
A significant part of the funding relies on bank loans, for which Musk has pledged Tesla shares as collateral. He reportedly does not like this situation, making its resolution unclear.
Q.Why might Twitter's CEO find it difficult to provide external verification of bot accounts?
Why might Twitter's CEO find it difficult to provide external verification of bot accounts?
According to CEO Parag Agrawal, performing an external check on bot accounts would require using private information. Twitter does not share such information, making the check impossible.
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