Elon Musk considering 'drastic action' as Twitter takeover in 'jeopardy'
Though it's not clear what tech mogul might do seeing that he has committed to completing the transaction
Updated Elon Musk has decided that it's impossible to verify the number of bot accounts on Twitter even though the social media network has told him their estimates, how they arrived at such estimates, and provided his team with a "firehose" of user data that is usually sold to corporate customers.
In case you were wondering whether the Tesla and SpaceX kingpin was ever going to follow through with his bid to buy the microblogging website, sources have told The Washington Post that the deal is in "serious jeopardy" due to those nebulous bot figures.
In light of the number of fake accounts that cannot accurately be determined, despite the great lengths Twitter has gone to provide evidence, the source told WaPo that Musk's team is "expected to take potentially drastic action," though what that "drastic action" may be is unknown.
Observers have long speculated that the bot figures are merely an excuse for Musk to bail on the transaction. Certainly, since the billionaire announced his intention to buy Twitter in April, the company's share price has plummeted, meaning the touted $44 billion price tag is already way too high. The drama has also had a knock-on effect on Tesla's value.
But walking away would not be so easy. Musk has committed himself to the deal unless something serious happens to Twitter's business, and the bot issue is thought not to qualify. As Twitter continues to sustain damage from the prolonged negotiations, it is in the company's interest to make sure the transactions completes too. And if Musk bolts at the altar, he'll be on the hook for the $1 billion breakup fee.
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The only comment out of Twitter regarding the process was: "Twitter has and will continue to cooperatively share information with Mr Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms."
For a more tangible sense of the difficulties the transaction has caused Twitter, the company announced yesterday that it had laid off 30 percent of its recruiting team.
Twitter has frozen hires since May under the shadow of Musk's takeover and reshuffled the exec team in a bid to cut costs. These layoffs are limited to the talent acquisition unit, affecting less than 100 people, the Wall Street Journal said.
Since hiring freezes aren't unusual during corporate acquisitions, it makes sense that Twitter would want to ensure recruitment runs efficiently and responsibly, as put by a Twitter spokesman. ®
Updated to add at 2300 UTC
Musk's lawyers have written to America's financial watchdog, the SEC, indicating he is quitting the proposed takeover on the grounds Twitter wouldn't give him the data he wanted to satisfy his concerns that too many accounts on the site are fake or bots. This is a point he's been banging on about for weeks. Twitter insisted less than five percent of its monetizable daily active users were spam accounts, and Musk thinks it's a lot higher.
One might say the Tesla billionaire has been trying to find ways to wriggle out of a deal he waived business due diligence on.
Twitter, in response to the SEC letter, just now vowed to sue Musk to force him to stick to his deal as promised, which means paying a $1 billion breakup fee if he walks away or buying the biz for $54.20 a share – the stock is currently about $34 apiece after falling five percent on today's news.
Twitter chairman (and Salesforce co-CEO) Bret Taylor tweeted:
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.