Elon Musk’s deal to buy Twitter is in peril

Elon Musk’s deal to buy Twitter is in serious jeopardy, three people familiar with the matter say, as Musk’s camp concluded that Twitter’s figures on spam accounts are not verifiable.

Musk’s team has stopped engaging in certain discussions around funding for the $44 billion deal, including with a party named as a likely backer, one of the people said. The people spoke on the condition of anonymity because of the sensitivity of the ongoing discussions.

Talks with investors have cooled in recent weeks as Musk’s camp has raised doubts about the recent data “fire hose” — a trove of data sold to corporate customers — they received from Twitter. Musk’s team’s doubts about the spam figures signal they believe they do not have enough information to evaluate Twitter’s prospects as a business, the people said.

Elon Musk lines up growing list of investors to take over Twitter

Now that Musk’s team has concluded Twitter’s figures on spam accounts are not verifiable, one of the people said, it is expected to take potentially drastic action.

The person said it was likely a change in direction from Musk’s team would come soon, though they did not say exactly what they thought that change would be.

If Musk pulls out of the deal, it will potentially trigger a massive legal battle.

Twitter accepted a $44 billion takeover offer from Elon Musk on April 25. Why did he want to buy the social media giant? (Video: Hadley Green, Julie Yoon/The Washington Post)

The terms of the deal say Musk must pay $1 billion to break up the deal, but legal experts have said that Twitter could try to force Musk to go through with the purchase if his reason for scuttling it is not based on the company’s fundamental business. When he made his offer in April, Musk waived his right to take a deeper look at Twitter’s finances. Twitter spokesperson Trenton Kennedy declined to comment. Musk did not immediately respond to a request for comment.

In reversal, Twitter plans to comply with Musk’s demands for data

Musk shook up the social media world earlier this year with his unprecedented offer to take the company private, arguing he would be able to grow Twitter and make it more open and, in his mind, politically neutral. He said he would let former President Donald Trump back on the service and argued his content moderation practices infringed on free speech.

But soon after, questions arose about whether he would actually follow through. A global sell-off in tech stocks deeply cut into his personal net worth, which he had leveraged to get commitments for the debt he needed to buy Twitter.

At Financial Times Future of the Car summit on May 10, the Tesla CEO said permanently banning then-President Donald Trump from Twitter was “flat-out stupid.” (Video: Financial Times)

Musk’s enthusiasm for following through with the deal has been under question since at least May, when he said the deal was “on hold” until he could ascertain whether Twitter’s claim that fewer than 5 percent of accounts are bots or spam was accurate. He accused Twitter of withholding information, while the company said it was acting in good faith and providing everything the deal’s terms required it to.

“Twitter has not been cooperative,” said a person familiar with the discussions, speaking on the condition of anonymity because of the sensitive nature of the talks.

The debate over bots on Twitter isn’t new. The company has long said around 5 percent of its accounts are bots or spam, while outside researchers have sometimes said the number could be much higher. Because of how quickly the tactics for creating and concealing the nature of fake accounts change, it is difficult for even experts to make strong pronouncements on who is right.

Leave a Comment