May 29, 2022

Is The Musk/Twitter deal dead?

 I've read some speculation that the Musk buyout of Twitter deal is dead. But is it?  Twitter shareholders are suing Musk, the SEC also sent him a letter about late filing of his share purchase details and meanwhile Musk has put the deal on pause because he has some issues with the faulty Twitter reporting on the number of users who are actually bots.  That's all cause for pause, but is the deal actually dead? Or is this just aggressive negotiation tactics from all involved?

The summation via Business Insider:

Elon Musk's $44 billion Twitter acquisition continues to hang in the balance after the Starlink and Tesla CEO put the deal on hold pending confirmation of the number of bots on the platform.

Last weekend, his rhetoric intensified, first calling Twitter's lack of clarity on how the company calculated the 5% bots figure "very suspicious". He then agreed with a comment suggesting that if 25% of users on Twitter were bots, the deal to buy the platform should cost 25% less, which would knock a potential $11 billion off the sale price.
As scrutiny of Musk mounts and his other companies lose value, the billionaire is under pressure to make a decision on the takeover before his net worth declines even more. Experts say he two options: renegotiate the deal, or walk away entirely.

That does not mean the deal is dead. There is a real and legitimate concern from Musk that could either kill the deal or allow for a new price valuation.  But time is running out and that may be what kills the deal in the end:

"We believe it's currently a 60% chance that Musk tries to walk and use this spam account issue as the scapegoat to get out of the deal and a 40% chance Twitter's board and Musk come to a new deal price over the coming weeks," Ives said.
That new deal, Ives said, would be somewhere closer to the mid-$40 a share mark – a steep discount that would bring Musk close to his 25% discount demand.
However, Ives said Musk needed to hurry up before Tesla and Starlink stock fell again: "Musk is facing a fork in the road situation in which he has to decide his next step in this soap opera as Tesla investor patience is wearing very thin."
Only time will tell, but expect it to tell us very soon.

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