Explained: Why Elon Musk’s Twitter acquisition is put on “hold”?
Reuters reported that shares of Twitter fell 20% in premarket trading.
New Delhi: Elon Musk may not buy Twitter at all. The Tesla CEO stated that his $44 billion deal to buy Twitter has been put on hold. Musk planned to acquire the microblogging site last month for $44 billion. The statement by Musk was released citing pending details to support Twitter’s claim that spam or fake accounts were less than 5% of its user base.
What did Musk say?
Musk on Friday took to Twitter stating, “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” Sharing a Reuters article of May 2 in his tweet, Musk wrote, “Twitter estimates spam, fake accounts comprise less than 5% of users –filing.”
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
Why did Musk put the Twitter deal on hold?
Earlier, Musk has stated that removing “spam bots” from Twitter will be one of his top priorities as far as the competition in the acquisition of the micro-blogging site is concerned.
What is Twitter’s claim on spam users?
Previously this month, Twitter had notified in a regulatory filing that false or spam accounts represented less than 5% of its monetisable daily active users during the first quarter. Also, the micro-blogging site said that it faced several risks until the deal with Musk is completed, including whether advertisers would continue to spend on Twitter.
Reaction to Musk’s announcement
Reuters reported that shares of Twitter fell 20% in premarket trading. Although Musk did not detail it in his Twitter announcement that the deal is going on hold, it could cause a flurry in the tech and investment ecosystem.
Why is it important?
Initially, Musk had announced that he would take Twitter private by buying it for $44 billion by taking a loan from Morgan Stanley. However, later he made a filing stating that he has received equity commitment from marquee investment houses including Sequoia Capital, Andreessen Horowitz, Larry Ellison, and others.