Twitter Stock Tumbles As WaPo Reports Musk Deal "In Serious Jeopardy"
Following headlines earlier in the day from Twitter that it stands by its "5% of accounts are bots" claim, The Washington Post reports that, according to three people familiar with the matter, Elon Musk's deal to buy Twitter is in "serious Jeopardy".
It appears Musk's team is not satisfied that the number of spam accounts is what the company claims, and talks with potential investors have "cooled in recent weeks."
“Twitter has not been cooperative,” said a person familiar with the discussions.
Ironically, as the WaPo news hit, The Wall Street Journal reports that Twitter has announced it has laid off 30% of its talent acquisition team.
The reaction in TWTR shares is significant, now back below pre-Musk investment levels...
As a reminder, the world's richest man has a signed deal with Twitter. Bloomberg's Matt Levine summed it up perfectly...
after you sign the merger agreement it simply doesn't matter if you believe that you have enough information to evaluate its prospects as a business! you have agreed to buy it! that's on you man!
— Matt Levine (@matt_levine) July 7, 2022
Levine concludes correctly that:
The reason that elon musk can't get out of the deal over the bots thing is not that he "waived due diligence." it's that he SIGNED A BINDING AGREEMENT TO BUY TWITTER, and that agreement does not have any outs for "i think there are too many bots."
In an emailed statement to Bloomberg, Twitter reiterates that it intends to complete the deal at the agreed terms.
Brace for an extended legal battle... or a lower price on the deal (which we suspect is the more likely outcome).
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