Friday (May 13), Elon Musk threatened to back out of the $44 billion acquisition of Twitter “until CEO Parag Agrawal publicly proves that less than 5% of users are bots or spam accounts.” The social media platform and one Bloomberg financial opinion writer call C A P.
Tuesday (May.17), Twitter’s board made it abundantly clear to Elon Musk that it intends to go through with the deal and plans to “close the transaction and enforce the merger agreement,” the New York Times reports.
“The board and Mr. Musk agreed to a transaction at $54.20 per share,” Twitter’s board expressed in a statement shared by The New York Times. “We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement.”
This latest development comes on the heels of Musk tweeting he was putting the deal on hold.
“My offer was based on Twitter’s SEC filings being accurate,” Musk proclaimed in a tweet. “Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.
Matt Levine, a Bloomberg financial opinion columnist, calls bulls**t on Musk’s threats to back out of the deal and accused the Tesla CEO of “lying.”
“The spam bots are not why he is backing away from the deal, as you can tell from the fact that the spam bots are why he did the deal. He has produced no evidence at all that Twitter’s estimates are wrong and certainly not that they are materially wrong or made in bad faith,” Levine wrote.
Levine went as far as to call Musk’s math regarding Twitter’s bot situation “laughable.”
“More important, nothing has changed about the bot problem since Musk signed the merger agreement. Twitter has published the same qualified estimate — that fewer than 5% of monetizable accounts are fake — for the last eight years,” Levine continued.
“Musk knew those estimates and declined to do any nonpublic due diligence before signing the merger agreement,” he added.
Levine and other analysts believe that Musk is “angling to reprice the deal for straightforward market reasons,” but the deal he agreed to doesn’t allow that to happen. Musk’s decision comes as tech stocks, including Telsa, took a tumble. Musk was relying on Tesla’s stock value to help finance the deal.
Further, Musk’s claims look like nothing more than lies because Twitter makes a pretty strong effort to rid the social media platform of bots and spam.
According to Twitter chief executive Parag Agrawal, Twitter suspends more than half a million suspicious accounts daily and locks millions that fail the test to prove a human runs them.
Based on internal measures, less than five percent of active Twitter accounts on spam. Agrawal contends that analysis cannot be duplicated externally because of the need to keep user data private.
Regardless, it does look like Musk has cold feet, but Twitter is like you broke it. You pay for it.
Photo: Matt Cardy / Getty