The planned takeover of Twitter by billionaire Elon Musk is in “serious jeopardy”, according to a report, sending shares in the company 4 percent lower in after-hours trading on Wall Street.
The article indicated that talks with investors regarding the $44-billion deal have cooled in recent weeks as Musk’s camp has raised doubts about the recent data they received from Twitter. Musk’s team’s doubts about the spam figures signal they believe they do not have enough information to evaluate the social media platform’s prospects as a business, people familiar with the matter said.
Twitter is considering demanding a $1 billion break fee from Musk if he attempts to renege on the agreement.
Twitter executives defended their spam policy, citing a specialist team and automated processes that weed out 1 million fake accounts a day, but the report stated that access to the company’s feed of public tweet data had still failed to satisfy Musk. Twitter has stated consistently that fewer than 5 percent of its daily active users are spam accounts – a figure that Musk doubts openly.
The report noted a “change in direction” from Musk was likely to come soon. Also, sources indicated that Musk will follow through on threats to attempt to walk away from the agreed deal.
However, legal experts said that Tesla’s CEO would struggle to terminate the takeover without a legal fight. The agreement to buy Twitter contains clauses that include seeking “specific performance”, which means asking a court in Delaware – the US state that has jurisdiction over the deal – to order Musk to carry out the deal at the agreed price of $54.20 a share. Shares were priced at $37.10 in after-hours trading.
