WILL HE, WON'T HE? Elon Musk stalls Twitter takeover AGAIN after board endorses deal
Appearing virtually at the Qatar Economic Forum in Doha, Qatar, on June 21,Elon Musk spoke about his recent offer to acquire Twitter and the issues surrounding the social media platform, including the number of spam users on the system and the coming together of the debt portion of the deal.
Wearing a white shirt and grey suit, the chief executive officer of Tesla Inc’s interview with Bloomberg News Editor-in-Chief John Micklethwait saw him mentioning a few unresolved matters and how he is still waiting for a resolution on how many spam bots — automated accounts rather than humans — there are on the social media platform. “The transaction can’t be completed before that issue is cleared up and shareholders approve the deal, “Musk said. He added by saying, “There’s a limit to what I can say publicly. It is somewhat of a sensitive matter.”
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Musk’s weeks of stalling, since May 13, have led many to speculate that he is attempting to turn the deal due to the general market instability that the Tesla CEO has repeatedly voiced concerns about. “A recession is inevitable at some point. As to whether there is a recession in the near term, I think that is more likely than not. It’s not a certainty, but it appears more likely than not,” he told the attendees. Ealier in May, Musk said that a recession would be good for the US economy and that bankruptcies need to happen.
Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.
— Elon Musk (@elonmusk) May 27, 2022
Also, all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!
At the event, he also spoke about his plans to lay off a section of Tesla’s staff due to his “super-bad feeling” about the economy, saying that the car manufacturer will cut about 10 percent of its “salaried workforce, which is actually just really only a 3 percent, 3.5 percent reduction in total headcount and not super material.”
On the other hand, Twitter's board has recommended unanimously that shareholders approve the proposed $44 billion sale of the company to billionaire and Tesla CEO Elon Musk, according to a regulatory filing on June 21 as per ABC. Shares of Twitter are far short of the $54.20 per share that Musk has offered to pay. The company's stock last reached that level on April 5 when it offered Musk a seat on the board before he had offered to buy Twitter. In a filing with the US Securities and Exchange Commission, Twitter's board of directors said, “It unanimously recommends that you vote (for) the adoption of the merger agreement." As per reports if the deal gets closed, the investors will make a profit of $15.22 for each share they own.
Key issues to be resolved for Twitter buy
- The CEO wants more clarity from Twitter on how many of its users are genuine. Public disclosures from Twitter place the number of fake accounts at less than 5 percent of its monetizable daily active users. However, Musk is doubtful about the figure and he said, “It’s probably not most people’s experience when using Twitter.” And added, “We’re still awaiting a resolution on that matter, and that is a very significant matter.”
- The second barrier is the debt required to finance it. Musk in May announced to pay $33.5 billion in cash. He has also received $7.1 billion in equity financing commitments from investors including Oracle co-founder Larry Ellison and the crypto exchange Binance. He said that the remainder of the funding will come in the form of bank loans. Despite being the world’s richest person, his wealth is tied up in Tesla stock.
- And the last one is approval from Twitter’s shareholders. Investors are expected to vote on the deal in late July or early August. Whether or not Musk will get enough support for the buyout is still not clear. In May, a few Twitter shareholders sued Musk and the company itself over the chaotic handling of the process.