Elon Musk’s deal to buy Twitter is “in serious jeopardy”, according to sources close to the $44 billion negotiation.
The Washington Post reports Musk’s team believes it will not be able to get accurate statistics on the number of fake and spam accounts on the social media platform.
This has led to a pause in the negotiations.
Twitter spokesperson Adrian Zamora pointed to a statement issued by the company in June.
It mentions that the firm intends to set the deal and enforce its agreement with Musk, which must still be ratified by shareholders at a special meeting.
The statement said: “Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders.”
Musk agreed to acquire it for $54.20 per share, a 38 percent premium to Twitter’s closing stock price on April 1, when the billionaire announced he holds more than nine percent of the company.
Musk, who also runs Tesla and SpaceX, is trying to buy the company because he believes the platform violates free speech principles and that it would be preferable if the firm went private.
The First Amendment to the US Constitution protects freedom of speech, but only when the government censors speech, not when firms like Twitter create their own rules about what is and isn’t allowed on their platforms.
After Twitter’s stock began to plummet, Musk stated that the transaction could not proceed unless the social media giant provided more details regarding the quantity of spam and fraudulent accounts on the network.
He added that understanding the number of fake accounts is part of analyzing Twitter’s business, which generates the majority of its money from ad sales.
Even though Musk stated that a reduced sales price is not out of the question, Twitter has stated that it has no plans to cut the pricing.
In addition, the corporation allegedly gave Musk a goldmine of data.
Twitter allegedly removed one million spam accounts every day on Thursday and revealed in the first quarter that less than 5% of its 229 million daily users were bogus or spam-focused.
However, Musk’s takeover bid contains a termination fee, and if he back-pedals, it might lead to a court struggle.
An SEC filing on April 25, indicates terminating the contract would cost Musk $1 billion.
Mike Ringler, Musk’s lawyer, did not immediately reply to a request for comment.
Wedbush Securities analyst Daniel Ives wrote on Thursday the company estimates there is a 60% chance the acquisition would go through at a renegotiated price of $42 to $45 per share.
He added Musk has a 35 percent probability of walking away from the contract, paying the breakup fee, and presumably going to court with Twitter’s board.