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Tags: elon musk | twitter deal | 44 billion | valuation | bots

Musk's Blockbuster Twitter Deal Likely to Succeed

Musk's Blockbuster Twitter Deal Likely to Succeed
Elon Musk, chief executive officer of Tesla and SpaceX (Getty Images)

By    |   Tuesday, 07 June 2022 03:33 PM EDT

Following his astonishing $44 billion bid to acquire Twitter, Elon Musk has demurred over platform's true audience and demanded that Twitter show him its data on how many users are spam, or fake, accounts.

Twitter refused, saying that Musk’s offer is binding and that his time on the clock has run out.

The billionaire shot back Monday in a letter from his law firm Skadden, Arps, Slate, Meagher & Flom to say that Twitter was in "clear material breach" of its obligations and that Musk reserves all rights to terminate the merger agreement.

Musk argues that Twitter's claim that only 5% of its users are “bots,” or robots, could be as much as five times higher.

Since Musk's April 25 bid for Twitter, he has been compared to GE CEO Jack Welch and labeled a ruthless M&A pirate who — as shrewdly as any other corporate raider — is calculatedly seeking a better price than $54.20 a share. This is probable since technology stocks, including Twitter, have been hammered in the wild market volatility of the past two months. Twitter itself has lost roughly 25% of its value.

Despite this game of chicken, Musk is serious about his multibillion-dollar Twitter bid and is not likely to walk away, as underscored by his impassioned arguments over its valuation, Forbes writes in an opinion piece Tuesday.

Musk has also lined up private equity and venture capital investors and, on May 25, committed to provide an additional $6.25 billion in equity financing to fund a portion of the $44-billion deal to buy Twitter, regulatory filings with the Securities and Exchange Commission show.

While Musk, shockingly, did forgo his right to due diligence when he first struck a deal with Twitter's board, Forbes says he still has a legal “out.”

That would be what is called a "material adverse change" in Twitter's business. If Musk is correct that a large percentage of Twitter users are mere ghosts, this would not sit well with advertisers and mean that it is not worth what the board says, or investors believe, it is worth.

As the world’s richest man, Musk also has the deep pockets and the resources to take Twitter to court for drawn-out legal proceedings that could take years — Twitter does not.

In all likelihood, Forbes concludes, at the end of the day, the deal will come to fruition, possibly at a better price for Musk.

"The plain, time-tested fact is that most fine-print M&A disputes almost always end with the two parties making up and consummating the transaction," Forbes writes.

​Musk may just be trying to drive as hard a bargain as T. Boone Pickens, albeit in his own mercurial style.

© 2022 Newsmax Finance. All rights reserved.


StreetTalk
Following his astonishing $44 billion bid to acquire Twitter, Elon Musk has demurred over platform's true audience and demanded that Twitter show him its data on how many users are spam, or fake, accounts.
elon musk, twitter deal, 44 billion, valuation, bots
445
2022-33-07
Tuesday, 07 June 2022 03:33 PM
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