Tesla founder Elon Musk said his deal to buy Twitter is “on hold” as the company reviews the number of bots on the platform, The New York Times reports.
Musk, who is seeking to buy Twitter for about $44 billion, tweeted on Friday that the deal is “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”
Musk was referring to a filing earlier this month in which the company said that fewer than 5% of its daily active users are bots.
Musk in a follow-up tweet stressed that he is “still committed to acquisition.”
Stock dip:
Twitter stock plunged more than 10% after Musk’s tweet before climbing back slightly to an 8.5% loss by mid-day.
The tweets prompted more confusion and questions about whether Musk was getting cold feet or was trying to drive down the acquisition price.
Twitter made the disclosure before Musk made his bid, leaving some to question the motive behind the review.
Twitter’s stock price was trading below $41 on Friday, well below the $54.20 that Musk agreed to pay last month.
Breakup could be costly:
If Musk does pull out of the deal, his agreement with Twitter includes a $1 billion breakup fee.
The contract also includes a “specific performance clause” that could force Musk to pay up if the debt financing for the deal remains intact.
“Specific performance is an order from the court saying, Elon Musk, I know you don’t want to, but you’ve committed to pay for this thing; you’ve got to pay for it,” Brian Quinn, an associate professor at Boston College Law School, told the Times.
