Musk says $44 billion Twitter deal is on hold over fake account data

Musk says $44 billion Twitter deal is on hold over fake account data

May 13 (Reuters) – Elon Musk tweeted on Friday that his $44 billion cash deal for Twitter Inc (TWTR.N) was “temporarily on hold” pending the social media company providing data on the proportion of his fake accounts.

Shares of Twitter initially fell more than 20% in premarket trading, but after Musk, the chief executive of electric car market Tesla Inc (TSLA.O), sent a second tweet saying he remained committed upon agreement, they regained ground.

The shares fell 9.6% to $40.71 in trading on Friday, a steep discount to the acquisition price of $54.20 per share.

Join now for FREE unlimited access to

Musk, the world’s richest person, decided to forego any due diligence when he agreed to buy Twitter on April 25, in a bid to get the San Francisco-based company to accept its “best and latest offer”. That might make it harder for him to claim that Twitter somehow misled him.

Since Musk signed his deal to acquire Twitter, tech stocks have plunged amid investor worries about inflation and a potential economic slowdown.

The gap between the bid price and the value of Twitter shares had widened in recent days, implying less than a 50% chance of completion, as investors speculated that the slowdown would prompt Musk to s walk away or look for a lower price. Read more

“The Twitter agreement is temporarily suspended pending details supporting the calculation that spam/fake accounts indeed represent less than 5% of users,” Musk told his more than 92 million Twitter followers.

“To find out, my team will do a random sample of 100 followers” of the microblogging site, Musk tweeted, inviting others to repeat the process and “see what they find.”

“If we collectively try to determine the percentage of bot/duplicate users, we can probably crowdsource a good answer.”

Musk tweeted that he “relyed on the accuracy of Twitter’s public records” in response to a follower who asked him why he hadn’t thought of that before offering to buy the company.

Under the terms of Musk’s contract with Twitter, he has the right to ask the company for information about its operations after the agreement is signed.

But that’s to help him prepare to own Twitter, not to do his due diligence and reopen negotiations.

Twitter plans no immediate action against Musk following Musk’s comment, people familiar with the matter said.

The company considered the comment derogatory and a violation of the terms of their contract, but was encouraged by Musk who then tweeted that he was committing to the acquisition, the sources added.

Musk came to the Twitter office for a meeting on May 6 as part of the planning process for the transaction, a Twitter spokesperson said.

Twitter CEO Parag Agrawal also weighed in, tweeting “While I expect the deal to be done, we need to be prepared for all scenarios.” On Thursday, Agrawal announced leadership changes and a hiring freeze. Read more


Spam or fake accounts are designed to artificially manipulate or stimulate activity on services like Twitter. Some make something or someone seem more popular than it actually is.

Musk tweeted a Reuters story from ten days ago that cited the account’s fake numbers. Twitter said the numbers were an estimate and the actual number could be higher.

The estimated number of spam accounts on the microblogging site has remained stable below 5% since 2013, according to Twitter’s regulatory filings, prompting some analysts to question why Musk was raising it now.

“That 5% measure has been out for a while. He clearly would have seen it before… So it may well be more part of the price-lowering strategy,” said Hargreaves Lansdown analyst Susannah Streeter.

Representatives for Musk did not immediately respond to requests for comment from Reuters.

Tesla stock rose 5% on Friday. Shares have lost about a quarter of their value since Musk disclosed a stake in Twitter on April 4, fearing he could be distracted as Tesla CEO and may have to sell more Tesla shares to fund the deal.

There are many precedents for a possible renegotiation of the price following a market reversal. Several companies revised the prices of agreed acquisitions when the COVID-19 pandemic broke out in 2020 and caused a global economic shock.

For example, French retailer LVMH (LVMH.PA) threatened to back out of a deal with Tiffany & Co. The US jewelry retailer agreed to drop the price from $425 million to $15.8 billion.

Acquirers looking to get out sometimes turn to “significant adverse effects” clauses in their merger agreement, arguing that the target company has been significantly damaged.

But the language of the Twitter deal, as in many recent mergers, does not allow Musk to walk away because of a deteriorating business environment, such as a drop in demand for advertising or because shares of Twitter took a dive.

Musk is contractually obligated to pay Twitter a $1 billion severance fee if it doesn’t close the deal. But the contract also contains a “specific performance” clause that a judge can cite to force Musk into the deal.

In practice, acquirers who lose a specific performance event are almost never obligated to complete an acquisition and generally negotiate a monetary settlement with their targets.


Musk said if he bought Twitter he would “defeat spambots or die trying” and blamed the company’s addiction to advertising for why it allowed spambots to proliferate.

He also criticized Twitter’s moderation policy and said he wanted Twitter’s algorithm to prioritize tweets to be public.

This week, Musk said he would reverse the ban on Twitter imposed on former US President Donald Trump when he buys the social media platform, signaling his intention to reduce moderation.

Trump, who launched a rival social media app called Truth Social, took to his platform on Friday to weigh in.

“There is no way Elon Musk is buying Twitter at such a ridiculous price, especially since it is a business largely based on bots or spam accounts,” Trump wrote in a message, adding that his site is much better.

Join now for FREE unlimited access to

Additional reporting by Nivedita Balu and Shivani Tanna in Bengaluru, Ken Li in New York and Katie Paul in San Francisco; Written by Anna Driver and edited by Alexander Smith, Nick Zieminski, Alistair Bell and Himani Sarkar

Our standards: The Thomson Reuters Trust Principles.