3 issues Elon Musk says need to be resolved before his Twitter purchase
Billionaire Elon Musk cited major hurdles to smooth before he can complete his $44billion Twitter buyout. Due to these unresolved matters, the Tesla CEO had doubts about walking out of the deal entirely or just reducing the price of the deal.
Musk said in an interview with Bloomberg News Editor-in-Chief John Micklethwait, “the proportion of fake, spam, and bot accounts on the service are very significant. And of course, there is the question of, will the debt portion of the round come together, and will the shareholders’ vote in favor.”
The huge acquisition will have significant implications for the social media world. Considering Musk’s stance on freedom of speech on content moderation.
These past weeks, the seals of the deal seemed blurry, especially after Musk threatened to walk his way out of the agreement. Although the SpaceX CEO can’t get away that easily if he decides to move out of the deal. He will incur a $1 billion breakup fee with possible lawsuits for abandoning the deal.
“A recession is inevitable at some point. As to whether there is a recession in the near term, that is more likely than not,” says Elon Musk https://t.co/6sg71h3pu0 #QatarEconomicForum pic.twitter.com/etTSt1kdQc
— Bloomberg (@business) June 21, 2022
Bloomberg hosted an event on Tuesday. Here, Elon Musk confirmed there were a number of “unresolved matters.” He said he would need to settle these three issues before going ahead with the Twitter takeover.
1. Several fake accounts
Musk had always been vocal about his issues with the existence of fake accounts on Twitter. While pursuits of controlling social media platforms aren’t new, Musk still wants verification from Twitter. He wants to know how many of the Twitter users are genuine.
Twitter’s public exposures put the number of spam or false accounts at less than 5% of their “monetizable” active users. However, Musk is in doubt about this. He said on Tuesday, “It’s probably not most people’s experience when using Twitter.”
He added, “We’re still awaiting a resolution on that matter, which is a very significant matter.”
2. Security of the debt financing
According to Musk, the second major hindrance of his Twitter buyout is the amount of debt he needs to settle to finance the purchase.
In May, Musk offered to pay Twitter $33.5 billion in cash. Alongside this, he received investors’ $7.1 billion worth of financing commitments. One of them is Oracle and Binance co-founder Larry Ellison.
Twitter me & real-life me are quite different haha! pic.twitter.com/zedimZrthW
— Elon Musk (@elonmusk) June 21, 2022
While Musk confirmed that the remaining funds would come from bank loans, it was still unsure how this now would transpire. Even if he is the world’s richest person, most of his wealth was in a bind with Tesla stocks. He has pledged and sold billions in Tesla stocks as collateral for loans.
3. Approval of the shareholders
The last issue that Musk needs to iron out in the buyout is the Twitter shareholders’ approval. The voting will take place by late July or early August. It’s still uncertain if Musk will get the majority of the investors’ votes.
Last month, some of the shareholders sued Musk and the company for the unclear and chaotic acquisition process management.
Musk said, “Will the debt portion of the round come together? And then will the shareholders’ vote in favor?” Alongside the issue of fake accounts and these two are the “three things that need to be resolved before the transaction can complete.”
The 50-year-old entrepreneur has yet to put a hold on the takeover until he probed about the fake accounts and settled the two other reasons.
Moreover, in the most recent updates, the Twitter board unanimously approved Elon Musk’s buyout. The regulatory filing on Tuesday shows. However, the shareholders still have yet to decide and vote on Musk’s proposed deal of $44 billion.