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Elon Musk says his Twitter takeover is ‘pending.’

Already one of the most unusual corporate takeover attempts in modern business, Elon Musk’s $44 billion bid to acquire Twitter got a little weird on Friday.

First, in a pre-dawn tweet, Mr Musk said the deal was on hold. He said he wanted more details on the number of spam and fake accounts on the platform.

Then, about two hours later, Musk tweeted again. He said “remain committed” to the acquisition without providing any further details.

The seemingly contradictory messages left many wondering if Mr. Musk was being normal, trying to lower his acquisition price or looking for a bit of attention. Maybe it’s a combination of all three. Twitter shares yo-yoo in response to his posts.

As with many things involving Mr. Musk, it’s hard to know what he’s thinking. He did not immediately respond to a request for comment.

The announcements mark the latest chapter in the unfolding corporate story that has raised questions about free speech online and the ramifications of putting the world’s richest man in charge of one of the media platforms. most influential social media. Mr. Musk has pledged to relax the company’s content moderation policies. On Tuesday, he said he would lifting the ban on former President Donald J. Trump.

While most acquisitions of this size are handled in a certain way, Mr. Musk has opted for a more improvised approach. He conduct limited due diligence about the pre-charge deal, and said in an interview at a conference in April that he wasn’t interested in Twitter’s financial details.

On Friday, Mr Musk demonstrated how his whims could affect deal execution.

In his first tweet, Mr. Musk referred to a May 2 Twitter regulatory filing that included an estimate that less than 5% of Twitter users are spam and fake accounts. He has previously said that eliminating a background of fake accounts, bots and spam will be among his top priorities after the takeover.

Twitter has some limitations on account registration, and the company has long struggled with spam and bots. But it’s hard to give an exact figure on the size of the problem. On May 2 submit the application according to regulationsTwitter warned that it had applied “critical judgment” in calculating the number of bots, and that “spam or false account estimates may not accurately represent actual counts,” similar language as stated. used in previous records from the Company.

Twitter disclosed numbers of fake accounts before Mr Musk made his bid, leading some to see his comments as a tactic to lower the deal price or an excuse to back out altogether. Shares of Twitter traded at around $41 per share on Friday, compared with the $54.20 per share Musk agreed to pay last month.

Twitter did not respond to a request for comment.

Pulling out of the deal can be messy. Musk’s deal with Twitter includes a $1 billion breakup fee if he leaves. But the cost to Mr Musk could be much higher if he breaks the deal. The contract has a “specific performance clause” that could force Musk to pay Twitter if the debt he signed for the deal remains intact.

“The specific performance is a court order that says, Elon Musk, I know you don’t want to, but you’ve committed to paying for this; Brian Quinn, an associate professor at Boston College Law School who focuses on corporate mergers.

Mr. Musk could also try to kill – or renegotiate – the deal by arguing that there was a “material adverse events.”LVMH Moët Hennessy Louis Vuitton tried this approach with the $16 billion acquisition of jeweler Tiffany’s, citing the impact of the coronavirus pandemic. Tiffany’s then sued LVMHwhich eventually acquired the jeweler at a lower price.

However, the attorneys say that the high level for such claims is very high. And because Mr. Musk made his bid at breakneck speed, and didn’t scrutinize Twitter’s internal filings before signing a deal, he may not have a strong case. Twitter could argue that he could have been more self-aware of certain challenges the company faces and spent more time looking at its business.

Mr. Musk has pledged to use personal property to fund the deal for Twitter, a plan that has been marred by the recent drop in stock prices, including that of Tesla. Shares of Tesla have fallen nearly 30% in the past month. Musk has both sold Tesla stock as collateral for personal loans to raise cash.

If a deal is finalized, business challenges at Twitter could force Musk to solicit more of his stake in the electric-car maker to seal potential financial holes. And any problem at Tesla that causes its stock to drop far enough could trigger provisions in Mr Musk’s personal loans that force him to add more collateral, limiting his ability to invest. invest in his Twitter.

Tesla shares rose on Friday following Musk’s comments.

The volatility in shares of Twitter and Tesla following Musk’s tweets could capture the attention of many. The Securities and Exchange Commission charged Mr. Musk with securities fraud in 2018 after he falsely tweeted that he had secured funding to take Tesla private, causing the automaker’s shares to fall. This car increased by 6%. Musk and Tesla had to pay a $40 million fine for the tweet. A shareholder lawsuit against Mr Musk over the tweet is ongoing.

Marc Leaf, a partner with Faegre Drinker and a former attorney with the Securities and Exchange Commission, said: “If I were his attorney, I would spend the morning figuring out what all these things mean. What is this under federal security law?

Mr. Leaf said that Mr. Musk should be worried about how securities regulators might react to Twitter posts that directly affect the acquisition of the company. He also said it was unclear whether Musk’s post on Twitter required an updated record with regulators about his plans to take the social media company private, as it was announced. considered important information for investors. He said Musk’s lawyers are probably discussing whether to do so at some point today.

Alex Spiro, Musk’s managing attorney, did not return a request for comment.

Mr Musk’s tweet on Friday was not the first time he spoke about Twitter’s business. He raised questions about why celebrities and famous individuals aren’t using the platform more. He targets individual company executives who oversee company policies on removing harmful and illegal content.

The failure of Mr. Musk’s bid has created uncertainty within Twitter, a company already struggling to add users and generate more revenue. On Thursday, Twitter’s chief executive officer, Parag Agrawal, fired two top executiveshalted new hires and pledged to cut spending.

Kate Conger and Matthew Goldstein contribution report.

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