Billionaire CEO of Tesla Inc, Elon Musk, has declared he won’t proceed with his $44 billion takeover of Twitter Inc unless the social media giant can prove bots make up fewer than 5 percent of its users, casting more uncertainty over the deal.
In a post on Twitter, the world’s richest person said that “this deal cannot move forward” unless the social media firm provides proof of its claims, reiterating his own view that the ratio is far higher.
Musk’s latest online pronouncement complicates an already chaotic takeover, potentially one of the largest acquisitions the internet industry has ever seen, Bloomberg reported.
Twitter chief Parag Agrawal and Musk recently had a back-and-forth over the way the social media giant accounts for bots, stoking speculation that Musk may try to lower the price or even walk away.
Twitter’s shares fell another 3.2 percent in pre-market trading in New York, after sliding more than 8 percent the previous day, Bloomberg reported.
The spread between Musk’s offer price of $52.40 and its last trading price is currently about 40 percent, suggesting investors think there is little chance the deal will get done without a discount – if at all.
The social media firm said it is “committed to completing the transaction on the agreed price and terms as promptly as practicable,” in a statement on Tuesday.
“Fake users make up at least 20 percent of all Twitter accounts”
The battle over bots has become a sticking point for Musk, who told a tech conference in Miami on Monday that fake users make up at least 20 percent of all Twitter accounts, possibly as high as 90 percent, Bloomberg reported.
Twitter regularly states in its quarterly results that the average of false or spam accounts “represented fewer than 5 percent of our monthly daily active users during the quarter,” adding that it applied “significant judgment” to its estimate, and the true number could be higher.
Musk encouraged social media firm’s users to run their own tests for bots, crowd-sourcing the effort to calculate whether they made up less than 5 percent of the service.
Responding to Musk’s assertions, Agrawal posted a long thread laying out his company’s methodology. Musk replied by first asking why the social media firm doesn’t just call users to verify their identity.
The proposed takeover includes a $1 billion breakup fee for each party, which Musk will have to pay if he ends the deal or fails to deliver the acquisition funding as promised.
It is unclear whether an update by Twitter on the number of fake accounts – if materially larger than 5 percent – would trigger a so-called material adverse effect clause, releasing Musk from the breakup fee.
The latest barrage of tweets from the world’s richest person is yet another twist in Musk’s attempted takeover of the micro-blogging site.
A prolific user with over 90 million followers, he revealed a stake of more than 9 percent in the company last month, then launched an unsolicited takeover offer – without detailed financing plans – all within a matter of weeks.
Musk caused the potential cracks in the deal to widen last week when he tweeted that his offer to buy Twitter was “temporarily on hold” until he gets more information about the proportion of fake accounts.
Roughly two hours later, Musk claimed in another tweet that he was “still committed” to the deal.
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