The landmark deal that would see Elon Musk take over Twitter and make it private has hit a stumbling block as Musk wants to verify the amount of fake accounts.
Tesla (TSLA) CEO Elon Musk said he is committed to his $42 billion takeovers of social media giant Twitter (TWTR) after putting it on hold earlier on Friday. Musk said in an earlier tweet that he is putting the deal on hold till he can verify that spam or fake accounts represent fewer than 5% of the total users on Twitter.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn— Elon Musk (@elonmusk) May 13, 2022
Twitter estimates that fewer than 5% of the accounts on the site are spam or fake, according to a Securities and Exchange Commission filing. Musk claimed in April that he wanted to authenticate every Twitter user.
Twitter’s share price was down over 17% at $37.2 in premarket trading, while Tesla shares were up over 5% at $769.27 in premarket trading.
The merger agreement, on page 30 of the filing, states that Musk will have to pay $1 billion in the form of a termination fee if the takeover falls through.
On Thursday, Bloomberg reported that Musk is seeking new funding for the Twitter takeover, as he looks to scrap previous plans to take a margin loan against Tesla stock.
The Tesla CEO started his takeover campaign of the social media site last month by buying a prominent stake in Twitter and then offered to buy the firm for $54.2 per share, which would value the company at around $41.4 billion.
The offer was initially reportedly rebuffed by Twitter’s board but was later accepted. Musk said he wants Twitter to be a platform dedicated to free speech.
Musk is also a prominent supporter of cryptocurrencies over the past few years, often discussing popular memecoin Dogecoin (DOGE) and bitcoin (BTC) on social media.
Dogecoin slumped by more than 7% following Musk’s statement on the Twitter deal. It has since recovered back to $0.0904 after trading at a low of $0.0869.
Tesla converted $1.5 billion of its balance sheet into bitcoin in February 2021.