However, the deal came to an unexpected halt when Musk doubted officially published Twitter statistics about fake accounts on the platform. Now, CNBC reports that Musk has three issues with Twitter deal and those will need to be resolved if the deal is to move forward.
There are three issues to resolve for the Twitter deal to go ahead
After bidding $44 billion to make Twitter his private company, Elon Musk had a change of heart. Doubtful of the number of fake accounts on the social media platform, the multi-billionaire threatened to walk away from the deal if no accurate information was provided. This, of course, means he could face a fee of reportedly $1 billion for breaking the deal up. Now, Musk has shared his three main issues concerning the buyout. Resolving them will mean the deal can move forward, it seems. Here’s what they are:
Fake accounts created by bots
This was actually the main reason why the deal was put on hold to begin with. Musk was concerned that the actual number of fake accounts on Twitter was higher than what Twitter had reported. And therefore, he insists on more clarity on how many actual users (a.k.a real people) are using Twitter.
Twitter previously announced the number of fake bot accounts was below 5% of the daily active users on the platform, but Musk had an issue with that number. He also underlined that this is probably not what most people experience on Twitter.
So far, there hasn’t been a resolution on this quite important matter.
The portion of debt required to finance the deal
Well, well, it seems that multi-billionaires also have to take loans. The second issue Musk has is that there’s a pretty significant part of the funding that should come from bank loans. Pretty much, he committed to paying $33.5 billion in cash. He also received $7.1 billion in equity financing commitments from investors. The remainder is what will be loaned from banks.
Musk may be a billionaire, but the majority of his wealth is in Tesla stock. He has now pledged billions in Tesla shares as collateral for those loans, but it seems he doesn’t like the situation that much.
How will this be resolved is somewhat unclear at the moment.
Shareholder approval
And last but not least, Musk has to gain approval from Twitter’s shareholders for the deal to become reality. Investors are reportedly going to vote on the deal in late July or at the beginning of August.
As you might imagine, whether or not Musk will get shareholder support is a mystery. You know, he is actually being sued by some Twitter shareholders for the chaotic approach to the buyout deal, so some may not be in favor of him taking over.
As you can see, it’s not only the disputed number of bot accounts on Twitter that has made Musk second-guess the deal. Factors such as financing and shareholder approval seem to also play a significant role in whether or not we will see this deal completed.
However, the reported number of fake accounts is something that could be hard to resolve. Initially, when the dispute about the issue was getting a bit heated (on Twitter, of course, where else – and with curious choice of emojis from Musk), Twitter’s CEO, Parag Agrawal, underlined that in order to perform an external check on which accounts belonged to bots, Twitter would need to use private information. But Twitter doesn’t share such information, so it was, according to Agrawal, impossible to do the check.
Well, we’ll have to wait and see what happens, as things are starting to look like the deal might not take place in the end.
