Time for a quick check in on the Elon Musk Twitter takeover – so how close are we to Elon becoming Tweeter–in-Chief?
Musk addressed the topic in an interview for the Qatar Economic Forum earlier today, in which Musk explained that there are three key issues that need to be resolved before he will proceed with his Twitter takeover bid.
Those three elements are:
- Fake profiles – Musk has repeatedly said that the deal cannot progress unless Twitter is able to provide evidence to support its claim that fake accounts only make up 5% of its user base. Twitter has since provided Musk’s team with its ‘full firehose’ of tweets to conduct its own assessment, but there’s no word as yet as to whether this will satisfy their demands on this aspect.
- Debt financing – Despite being the richest man in the world (arguably), Musk also needs to secure final funding for his $44 billion Twitter offer. Musk has committed to paying $33.5 billion in cash, with an additional $7.1 billion in equity financing commitments from investors. That leaves $3.4 billion which will come via bank loans, though the full details of how this will work have not been finalized.
- Shareholder approval – Lastly, Twitter shareholders actually have to accept Musk’s proposed deal, which Twitter’s board has recommended that they do. This is likely a formality, but it’s another step that needs to be taken for the deal to be confirmed - and with some Twitter shareholders suing Musk over the deal already, there is a chance it could get blocked at this step.
According to Musk, the deal will not be able to progress until these final details are clarified, but for Twitter’s part, it’s pushing ahead with the particulars either way, filing a new proxy statement with the SEC which once again states that it’s ‘committed to completing the transaction at the agreed price’.
Twitter Board chair Bret Taylor recently echoed the same, which suggests that Twitter will look to press Elon to consummate the deal as soon as possible, as opposed to letting him walk away on a technicality, or re-negotiate for a lower price.
Market speculation suggests that the latter is where Elon is aiming, looking to reduce his $44 billion outlay on the basis of fake profiles being a more significant element of the app than had been publicly communicated.
Though the prospects of this being a viable pathway are not great, with the SEC accepting Twitter’s past assessments of fake accounts in its official updates, which may mean that Elon has to pay up, even if he does find that there are more fakes than he expected.
Either way, that’s currently where we’re at, and we won’t know what comes next until Elon’s team comes back with their own assessment of Twitter’s data, and looks to frame that as they choose.
And Elon and Co. also have various other issues to contend with, including staff cuts at Tesla, legal action from staff, labor disputes and more.
Adding even more staffing drama into that mix doesn’t seem immediately appealing (Musk has said that he will cut Twitter staff too), but the Twitter deal is progressing at its own pace, and we should have some more insights from Musk and his team shortly.
We’ll keep you updated on any progress.