Will Elon Musk complete his $43 billion takeover of Twitter?

One tweet forward, two tweets back. Elon Musk on Friday, May 13, questioned his intention to buy Twitter. After the announcement at dawn that the acquisition was “outstanding” due to doubts about the number of fake social media accounts, the cranky boss assured that “always committed” to complete the transaction.

In a sign of excitement over the billionaire’s delay, Twitter’s stock price plummeted. The title traded Friday at just over $40, a far cry from the $54.2 per share that Elon Musk offered in his takeover bid, which valued the company at $43 billion. Can the operation fail? Franceinfo is looking into this issue.

In a message posted on Friday, the Tesla boss says he wants to make sure “that spam and fake accounts account for less than 5%” of the 229 million active users claimed by Twitter. Far from being an auxiliary topic for the social network: these “Automated accounts are a pervasive problem on a platform where politicians, scammers, and even government propaganda outlets use bot accounts to spread and amplify their messages.”letter World.

Fake accounts (sometimes impersonating Elon Musk) have facilitated cryptocurrency scams in the past, while others have stolen the user’s login details. This is unbearable for the billionaire, who has placed the elimination of these fraudulent accounts at the top of his future priorities by formalizing his takeover bid.

5% of fake accounts come from documents shared in the spring via Twitter. (PDF file) to the Securities and Exchange Commission (SEC), which is responsible for monitoring financial markets in the United States. But “However, this official figure is far below some estimates.”pick it up The newspaper “New York Times (article in English)which reminds that the social network “imposes several restrictions” during registration, which facilitates the creation of shadow accounts.

Twitter itself gives grain to its critics. In documents submitted to the SEC, the social network writes that indeed “substantial judgment applied” set the number of fake accounts on its platform at 5% and adds that their “the actual number (…) may be higher than [son] evaluate”. Which is not trivial, as the financial value of the social network is based on 229 million daily users, called “monetizable”, that is, exposed to advertising.

However, the moment Elon Musk chose to share his doubts is amazing. As noted diversity (article in English), an estimate of 5% of fake accounts has been in Twitter SEC filings since the company went public nine years ago. Thus, the billionaire could request confirmation before making a purchase offer. To sow some more doubt, he announced that he wanted to test the numbers put forward by Twitter using a dubious method: testing the number of fake accounts on a sample of 100 at random.

Some analysts especially believe that the case of false accounts serves as an excuse for the entrepreneur to start a showdown with the company. “Wall Street will now consider the deal to be on the brink of collapse, or Musk’s attempt to negotiate a lower purchase price.”Dan Ives, an analyst at investment firm Wedbush Securities, told AFP.

Evidence that the number of real monetized users is lower than officially reported on Twitter would allow Elon Musk to have a strong case to pay less than the $43 billion originally promised. What would be of immediate interest to him: To buy the social network, the entrepreneur did develop a financial package based on both traditional loans from banks and investors, and loans secured by Tesla shares, as well as an outright sale of Tesla shares worth up to $ 21 billion. recalls World. But the automaker’s exchange rate fell by 29% in a month, which complicates the business of his boss.

The strategy of pointing the finger at worse-than-expected results to negotiate a reduction in the company’s purchase price could pay off: In September 2020, the LVMH group backed out of its takeover of jewelry company Tiffany, citing the context of the economic crisis caused by Covid-19, it was then reported Echo. After threatening legal action, the two groups eventually reconciled, agreeing on a lower ransom price.

Finally, can Elon Musk use fake accounts under the pretense of completely derailing a transaction? The party concerned did not say anything about this. But the maneuver wouldn’t be without risk: the deal he and Twitter made includes a $1 billion breakage fee in the event of an exit. And the contract has “specific performance clause” what would make the billionaire fulfill his obligation if his funding plan remained viable, assures The newspaper “New York Times.