Elon Musk tweeted on Friday that his $44 billion Twitter acquisition is currently on hold as he waits for the company to provide data on the number of spam and fake users, citing a Reuters report. Musk stated that he’s still committed to the acquisition in a follow-up tweet.
The whole thing started on April 4 when Musk acquired a 9.2% stake in the company. Following that, he offered to buy the entire company for about $44 billion (at $54.20 per share), having already rejected a seat on the board.
The deal would make Twitter a private company, with the stockholders getting $54.20 for each share they own once the transaction closed. However, Twitter’s recent disclosure about spam and fake accounts being less than 5% has put the whole thing deadlock.
Musk could potentially be using the disclosure from Twitter as a means to renegotiate or even get out of his deal. One reason for this could be the impact on Tesla shares since the deal was announced. Fearing that his attention might be divided now that Twitter’s into the fold, Tesla stock has fallen by about 25% since not to mention that he might have to sell his own Tesla stock to fund the purchase.
Twitter stock was initially down by 20% in premarket trading but regained some ground after Musk sent out a follow-up tweet stating that he was still committed to the acquisition. Shares fell 10% to $40.50 on Friday morning, falling from the previous $54.20.
As far as Tesla stock is concerned, it closed at $728.05 on Thursday and was opened at $773.48 on Friday morning. Tesla stock is going at $778.38 per share, an increase of 6.95% at writing.
Musk will owe Twitter as much as $1 billion if the deal does fall apart, depending on why the deal was broken. This breakup fee is just over 2% of the deal value and falls in the average for such transactions. The penalty is meant to keep the parties involved from breaking the agreement and take care of any inconveniences from breaking such deals.