Elon Musk's $44 billion Twitter buyout remains in a pseudo stalemate as the Tesla executive weighs his options before officially sealing the deal. According to Musk, who spoke at Bloomberg's Qatar Economic Forum via video conference, a total of three so-called "unresolved matters" still exist as significant dilemmas in the finalization of his purchase of Twitter.
Musk has been headstrong in his commitment to gearing the site for better free speech parameters but has recently forwarded discrepancies with Twitter's fake account and bot infestation, which caused the executive to put the deal "temporarily on hold" in mid-May. In June, Musk fielded continued concerns on the nature of bot accounts on Twitter, sending the firm an official document that cited a "clear material breach" of merger terms.
In terms of the $44 billion agreement, however, lives a clause that disallows explicitly Musk from acquiring foolproof due diligence, meaning these complaints are null and void in the grand scheme of the initial Twitter deal. Musk most likely waived due diligence in his efforts to fast-track the buyout, and many are considering his newfound reluctance as a way to renegotiate the terms, which remain on the basis of $54.20 per share of Twitter stock.
For its part, Twitter has remained adamant on this price point, reiterated once more by Twitter's own independent board chair, Bret Taylor, who relayed the current thoughts of upper Twitter management as being "committed to the transaction under the agreed upon terms." The social media company has also consistently highlighted that the spam and bot accounts that make up the site exist under 5% of Twitter's total "monetizable" daily active users (mDAU) via internal estimates.
Still, Musk sees bots as a major problem in the face of his potential buyout, saying amid his appearance at Tuesday's event (June 21) that the 5% estimation is "probably not most people's experience when using Twitter," adding that the spam account numbers on the social media site are "a very significant matter."
In addition to the problem with bot accounts on the site itself, Musk is also wary of the inevitable shareholder approval of the Twitter deal, which is slated to occur sometime in July or August officially. It's unclear whether Musk will be granted full approval by Twitter's myriad of investors, especially following their suing of the executive and Twitter last month on the grounds of a chaotic agreement process, citing Musk's online behavior as "conduct designed to create doubt about the deal and drive Twitter's stock down substantially."
Lastly, Musk also pointed out debt financing as a key catch-22 in the Twitter buyout proceedings. Of the total $44 billion necessaries for acquiring Twitter, Musk set aside $33.5 billion in cash in May. He also has $7.1 billion acquired via equity financing from Binance, a cryptocurrency exchange, and Larry Ellison, co-founder of Oracle. That leaves a little over $3 billion on the table in the form of bank loans, which will be leveraged via previous sales and pledges of Musk's Tesla shares.
"Will the debt portion of the round come together? And then will the shareholders vote in favor?" asked Musk on Tuesday. In addition to the long-fielded debat on Twitter's total bot account numbers, these are "the three things that need to be resolved before the transaction can complete."
It's important to note that if the deal doesn't go through for whatever reason, Musk and Twitter could see a fine of $1 billion, in addition to several lawsuits depending on the theoretical setback. Musk himself took to Twitter's headquarters last Thursday to give a speech to staff, which was met with uncertainty and dismay by several Twitter employees. The executive likewise came under fire for axing SpaceX workers for an open letter criticizing Musk's recent behavior.
