Elon Musk says Twitter deal ‘temporarily on hold’

New York Post

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Elon Musk said on Friday he was putting a temporary halt on his much-anticipated deal to buy Twitter for $44 billion, sending shares in the social media giant plummeting.

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” the Tesla CEO said in a tweet.

The stunning announcement sent Twitter stock tumbling 20 percent in premarket trading, while Tesla — which Musk had proposed using to help fund the mega-deal — jumped 5 percent.

In his tweet, the billionaire included a link to a May 2 Reuters article quoting Twitter’s filing on Monday.

“Twitter Inc estimated in a filing on Monday that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter,” the Reuters article said.

It was unclear whether the fake account issue could scuttle the Twitter deal. Investors have had to weigh legal troubles for Musk, as well as the possibility that acquiring the platform could be a distraction from running the world’s most valuable automaker.

Wall Street investors now see a less than 50% chance that the deal closes, according to Dan Ives, an analyst at Wedbush. He added that Musk’s move amounts to a “Twitter circus show” since Wall Street will likely view this deal as “likely falling apart” or Musk negotiating for a lower deal price.”

Ives said that Musk could be trying to rearrange the financing of the deal so that he doesn’t have to be relying on leveraged shares of his electric car company, Tesla. Alternatively, Ives said that Musk could simply walk away from the deal and pay a $1 billion breakup fee.

“Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,” he said.

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