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Elon Musk continues to delay Twitter buyout, and has three reasons why (update)
- Billionaire Elon Musk will buy Twitter for $44 billion.
- Twitter’s board approved the sale today.
- It is unclear how this will affect Twitter in the short- and long-term.
Update: June 21, 2022 (9:55 AM ET): Musk continues to drag his heels on the Twitter buyout, but according to CNBC, Musk has three things that need addressed if the deal is to proceed. In short:
- Fake accounts: Musk has long believed there are more than 5% fake accounts. Musk says he is still waiting for this to be addressed.
- Debt financing: Musk committed to paying $33.5 billion in cash for the company and received $7.1 billion in equity financing from investors, but the rest of the money will have to come through bank loans as much of Musk’s money is tied up in Tesla stock.
- Shareholder approval: Lastly Musk must get full approval from Twitter shareholders. A vote is expected to happen in late July or early August.
Will the deal actually happen or will it all fall apart in the long run? For now, that’s anyone’s guess though we wouldn’t be too shocked if Musk canceled this deal.
Update: May 13, 2022 (6:30 AM ET): Well, looks like there might be yet another delay in Elon Musk’s Twitter takeover. Musk tweeted on Friday morning that his deal to purchase Twitter is “temporarily on hold.” The billionaire is reportedly awaiting “details supporting” that spam and fake accounts do make up less than 5% of Twitter’s active accounts, as stated in the company’s recent financial report.
Twitter’s board today approved the sale of the social networking platform to Musk, who is by some metrics the world’s richest man. Musk will pay $44 billion for the platform, which is significantly more than the site’s current market value.
Musk originally made an official offer to buy Twitter earlier this month after he surprisingly became a shareholder with the highest stake in the company. However, the board rejected the offer by using a “poison pill” tactic, which effectively prevented Musk from gaining more than 15% of the company.
Earlier this week, however, Musk presented a financing package. This package essentially showed the board that he had the money to buy Twitter in his pocket, so to speak, which caused the board to look at the offer again. This time, the board capitulated.
Elon Musk buys Twitter: What will change?
Musk has said numerous times that Twitter needs to go private in order to be more successful. He has also said that Twitter needs to become a platform for unrestricted free speech with less reliance on user-banning tactics to moderate it. However, Musk has not laid out any concrete plans for how Twitter could change once he takes it over.
Once Musk has control of Twitter, it will be a private company. He could pretty much do anything he wants with it, considering he will not be beholden to shareholders.
Elon Musk buying Twitter is essentially an admission by Twitter’s board that its new CEO, Parag Agrawal, has not steered the company in the right direction since the departure of former CEO and co-founder Jack Dorsey. Musk’s offer, for example, is not as high as Twitter’s market value in November last year.