In this photo illustration, Elon Musk’s Twitter account is seen on a smartphone screen with the Twitter logo in the background.
Pavlo Gonchar Light Rocket | Getty Images
Elon Musk says he has three major hurdles to overcome before completing the Twitter acquisition.
Musk is looking to buy Twitter for $44 billion, a mega-purchase with huge implications for the world of social media — not least given the Tesla and SpaceX CEO’s contentious stance on content moderation and free speech.
But the deal’s fate has become more uncertain in recent weeks after Musk threatened to quit, citing concerns about the number of fake accounts on the platform. The billionaire could face a $1 billion breakup fee and possibly a lawsuit if he were to abandon the deal.
Speaking at an event hosted by Bloomberg on Tuesday, Musk said there were a number of “outstanding issues” that needed to be resolved before he could move forward with a takeover.
1. Fake accounts
Musk has made no secret of his concerns about the number of fake accounts on Twitter. Attempts to manipulate social media platforms with fake accounts and bots aren’t exactly new, but Musk says he wants more clarity from Twitter about how many of its users are real.
Public disclosures by Twitter put the number of fake or spam accounts at less than 5% of its “monetized” daily active users. Musk is suspicious. On Tuesday, he said it’s “probably not the experience of most people when they use Twitter.”
“We are still waiting for a resolution on this issue and this is a very important issue,” he said.
Last week, Bret Taylor, Twitter’s independent chairman, said the company’s management remained “committed to the transaction on the agreed terms.”
2. Debt financing
The second major roadblock facing the Twitter transaction, according to Musk, is the amount of debt required to finance it.
Musk in May pledged to pay $33.5 billion in cash for the company. It has also received $7.1 billion in equity financing commitments from investors including Oracle co-founder Larry Ellison and crypto exchange Binance.
Musk says the rest of the funding will come in the form of bank loans, but how exactly that will happen remains uncertain. Despite being the richest person in the world, most of Musk’s wealth is tied up in Tesla stock. He has sold and pledged billions in Tesla stock as collateral for loans.
3. Shareholders’ approval
The final hurdle for Musk to pull off his acquisition is approval from Twitter shareholders. Investors are expected to vote on the deal in late July or early August.
Whether or not Musk will get enough support for the purchase remains unclear. Last month, some Twitter shareholders sued Musk and the company itself over the chaotic handling of the process.
“Will the debt portion of the round come together? And then the shareholders will vote yes?” Musk said on Tuesday.
Those — along with the issue of fake accounts — are “the three things that have to be resolved before the transaction goes through,” he said.
