(PresidentialInsider.com)- Tesla CEO Elon Musk’s deal to purchase social media giant Twitter is apparently on hold pending more information.
One of the conditions that Musk has set for completing his reported $44 billion purchase of the company is transparency in the total number of spam or fake accounts that the platform has.
Apparently, Twitter claimed in filings with the Securities and Exchange Commission that about 5% of their accounts could be classified as fake or spam. But, according to a tweet Musk sent out last week:
“20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate.”
He then added:
“Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”
That post he made was in response to an article written by Teslarati, claiming that Musk was looking to get a better deal for Twitter due to the high number of fake/spam accounts on the platform. This would make sense, too, especially if Musk is telling the truth in that his offer price was based on the SEC filings saying only about 5% of accounts fell into that category.
Does that mean that if the spam/fake accounts constitute 20% of all accounts that Musk would want a discount equivalent? It’s possible. At the very least, he’ll want to lower the offer from his $44 billion original offer, though it isn’t certain that a lower number would get the deal done.
According to the Teslarati article:
“Musk said he believes 20% of Twitter accounts are fake or spam, a number that needs to be significantly reduced and could be the reasoning behind his thirst for a renegotiation of terms. Perhaps Twitter is not as valuable with fewer users, of course, and Musk may feel that the already-large asking price of $54.20 per share is simply too high to justify when one-in-five users are not actually humans.”
Again, it would seem reasonable that Musk — or anyone else for that matter — would want to renegotiate terms of a business deal if all the ducks didn’t line up during the due diligence phase. And this is what seems to be happening with the discrepancy between Twitter’s claims about fake/spam accounts and Musk’s claims.
So, what happens from here?
For his part, Musk said just last week that he was “still committed” to purchasing Twitter, even though the deal as originally written is currently on hold. He obviously wants confirmation of the social media giant’s 5% fake/spam accounts claims, or renegotiated terms based on the actual number — whatever that might be.
If Musk were to decide to renege and cut ties with Twitter in this deal, it won’t be an easy split. Teslarati reported that if that were to happen, Musk could face litigation from Twitter, and he’d also be forced to pay a termination fee of $1 billion.
That’s quite a steep price to pay and many potential headaches that Musk may believe aren’t worth it.