TWITTER 801 words
Elon Musk says he might try to renegotiate $44B Twitter deal for less
(c) 2022, The Washington Post · Faiz Siddiqui · BUSINESS, TECHNOLOGY, US-GLOBAL-MARKETS · May 17, 2022 - 4:08 AM
SAN FRANCISCO - Elon Musk could seek a lower price for Twitter, he said at a conference Monday, just days after tweeting his $44 billion bid for the site was "temporarily on hold." Musk accused Twitter of a potential "material adverse" misstatement regarding the proportion of fake accounts on the site, which could give him the option of walking away from the deal if it were proved true.
Speaking in a closed-door session at the All-In Summit in Miami, a conference with tech founders and media personalities, Musk said a deal for Twitter was not "out of the question" at a lower price. The comments were first reported by Bloomberg.
According to audio of the event posted Monday evening, Musk was asked if "at a different price it might be a totally viable deal."
"I mean, it's not out of the question," he said, according to the audio posted by the All-In podcast. "The more questions I ask, the more my concerns grow."
Musk said Twitter could have been misleading him about the percentage of fake accounts on the website, an issue that led him to declare the deal on hold over the weekend.
"It's a material adverse misstatement if they, in fact, have been vociferously claiming less than 5% of fake or spam accounts but in fact it is four or five times that number," he said.
Musk did not immediately respond to a request for comment.
Musk's comments Monday signaled he was continuing to distance himself from his initial $44 billion deal to buy the website, which was announced April 25. The Tesla CEO has sparred with Twitter management over the issue of spam bots, fake accounts that often promote cryptocurrencies and peddle scams, although analysts and some advisers have suggested Musk's focus on the issue is merely a pretext to back out of the deal.
Tesla's stock has fallen sharply since Musk's interest in Twitter became public, and Musk's net worth has taken a significant hit as a result. Much of Musk's financing for the deal relies on Musk's ability to leverage Tesla stock as collateral, similar to using property to back a loan. Most recently, the downturn in tech stocks had caused Musk to seek additional investors to lower his equity commitment in the deal, because Musk pledged $21 billion of his net worth - largely tied up in Tesla stock - to buy the site.
Twitter shares fell sharply after Musk's comments, closing at $37.39 on Monday - well below Musk's offer of $54.20 per share. The deal had been expected to close later this year before Musk tweeted on Friday that it was on hold "pending details supporting [Twitter's] calculation that spam/fake accounts do indeed represent less than 5% of users."
Musk has indicated he believes spam accounts make up a significantly larger share of Twitter's users. On Monday, he responded with a poop emoji to a Twitter thread from the social media site's CEO, Parag Agrawal, that sought to explain its methodology for counting bots.
Musk had been outlining his concerns about Twitter bots when he was prompted about potentially seeking a lower price. He had likened the issue to buying a house with a termite problem. The house would be worth less if it were found to consist mostly of termites - when compared to one that had only a minor termite problem, he said.
On the surface, Musk was outlining his frustrations with his inability to get what he viewed as straight answers out of Twitter.
To Paffrath, who was in the audience, it was clear Musk was "laying the groundwork or [had] started renegotiating."
Now with Musk's comments at the tech conference Monday, analysts signaled doubt about whether the deal would end up going through.
"Our view is that the Street is assigning the chance of Musk walking as more than 50% which speaks to the pressure on Twitter shares . . . $54.20 is out the window with this circus show," Dan Ives, analyst with Wedbush Securities, wrote in a note. "[We] view the $44 billion Twitter deal as having less than a 50% [likelihood] to get done as of today . . . If a revised deal does get done by Musk and Twitter, it will likely will be at a lower price."
Meanwhile, Twitter issued a new corporate filing late Monday in which the company answered questions related to whether there would be layoffs or whether its content moderation practices would change. But the document gave few answers other than to say that company practices would continue in the same vein as before for the time being. The phrase "business as usual" is repeated nine times in the filing.
The Washington Post