Twitter CEO Parag Agrawal insists that he still expects Musk’s acquisition to close


Twitter CEO and board member Parag Agrawal has insisted that he still expects Elon Musk’s $44 billion acquisition of the company to close, after the billionaire threw the deal into doubt by tweeting that it was ‘temporarily on hold’.

In a lengthy Twitter thread on Friday, Agrawal wrote: ‘While I expect the deal to close, we need to be prepared for all scenarios and always do what’s right for Twitter.’

Agrawal also addressed his move on Thursday to fire two top Twitter execs, saying that he is ‘accountable for leading and operating Twitter, and our job is to build a stronger Twitter every day.’ 

It came hours after Musk in a surprise move sent sent Twitter stock plunging by casting doubt on his takeover, as analysts speculated that he was trying to negotiate a lower price for the deal or pull out completely.

The remarks sent Twitter shares plunging, and they closed down nearly 10 percent for the day, with Agrawal’s comment late in the session having little impact. 

Twitter CEO and board member Parag Agrawal has insisted that he still expects Elon Musk's $44 billion acquisition of the company to close

Elon Musk has insisted that he is 'still committed' to his $44billion acquisition of Twitter after throwing the deal into chaos by tweeting that it was 'temporarily on hold'

Twitter CEO and board member Parag Agrawal (left) has insisted that he still expects Elon Musk’s $44 billion acquisition of the company to close

Citing a week-old regulatory filing from Twitter, Musk claimed that he wanted to pause the deal to verify that false or spam accounts represented fewer than 5 per cent of the company’s 229 million users during the first quarter.

Backpedaling a few hours later, Musk tweeted that he was ‘still committed’ to the acquisition, which had not been expected to formally close for several months. 

If he walked away from the deal, Musk would likely be on the hook for a $1 billion termination fee, and Twitter could also sue to enforce the terms of the merger agreement that both sides signed on April 25.

Though Twitter’s board agreed to the purchase last month, it still has not been approved by shareholders, and was not expected to close for at least several months. The legal and practical implications of Musk’s tweets were unclear. 

Shares of the social media company fell as much as 25 percent in premarket trading this morning, continuing a massive downward trend since his takeover bid was accepted by Twitter’s board on April 25.

The world’s richest man threw the deal into chaos by tweeting: ‘Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.’ 

He linked a Reuters report from May 2 stating Twitter’s calculation that bots were only a small percentage of the site’s users.

Musk had said that one of his priorities would be to remove ‘spam bots’ from Twitter once his takeover of the company was complete. 

It is not clear what the legal effect of his tweet was, and some analysts were baffled that he announced the move on Twitter rather than a regulatory filing.

Musk is now pausing his mammoth takeover demanding further information about the figures

Musk is now pausing his mammoth takeover demanding further information about the figures 

Hours later, Musk insisted that he was still committed to carrying out the deal

Hours later, Musk insisted that he was still committed to carrying out the deal

Wedbush analyst Dan Ives called Musk’s tweet ‘bizarre’ and said that it ‘now sends this whole deal into a circus show with many questions and no concrete answers.’ 

‘Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,’ Ives wrote in a note.

‘If Musk does decide to still go down the deal path a clear renegotiation is likely on the table,’ he added. 

Twitter’s share price has been sinking following the April 25 announcement that Twitter’s board had agreed to his buyout, when stocks closed at $51.70.

The stock closed at $45.08 on Thursday and plunged in pre-market trading Friday following Musk’s tweet, dropping as much as 13 percent. 

Twitter did not immediately respond to a request for comment. 

Meanwhile, Tesla shares, against which Musk has secured $6.25billion in funding for the acquisition, were up about 5 percent early Friday.

Tesla stock has been slumping, and is down 28 percent in the past month, amid investor concern that the Twitter deal will divide Musk’s attention, and that financing issues would force him to dump more of his Tesla holdings. 

The decline in Tesla’s share price has increased concerns about Musk’s ability to finance the Twitter deal. At Thursday’s closing price, Musk would have to put up more than a quarter of his Tesla shares to secure the $6.25 billion margin loan. 

Analysts questioned why Musk would suddenly express concern about Twitter’s estimate that 5 percent of accounts are fake, an estimate that the company has included in regulatory filings for years. 

Susannah Streeter, an analyst at Hargreaves Lansdown, said: ‘This 5% metric has been out for some time. He clearly would have already seen it… So it may well be more part of the strategy to lower the price.

‘It’s going to be highly frustrating for many in the company given that a number of senior executives have already been laid off,’ she said.

Twitter's share price has been declining since April 25 in a sign that Wall Street is not confident that the deal will be completed at the announced $44 billion price

Twitter’s share price has been declining since April 25 in a sign that Wall Street is not confident that the deal will be completed at the announced $44 billion price 

Tesla shares have been under pressure amid concern that Musk will have to sell more of his holdings in the company to finance his Twitter takeover

Tesla shares have been under pressure amid concern that Musk will have to sell more of his holdings in the company to finance his Twitter takeover

Neil Campling, head of TMT Research in London, said: ‘Laughable. We’d always said he may cut or run or change his tune at the 11th hour and 59 minutes and 59 seconds on the clock. It is farcical.

‘He has never had the full funding – we know that from his constant attempts to get financial support – but he also held all the cards. 

‘And the Twitter board have been held hostage and only have themselves to blame for this mess. No other buyer will emerge – if he decides he is still interested he can name his price – and it won’t be higher!

‘They (the board) should have seen this coming. There was a specific performance clause in the merger agreement (section 9.9), which gave Twitter the right to “consummate the closing (of the deal)” but only if he had the financing… which he doesn’t.’

Michael Hewson, chief markets analyst at CMC Markets, added: ‘Obviously, the markets are reacting as if he is going to pull out of the deal, otherwise why are Twitter shares down 20 per cent. So maybe he’s (Elon Musk) paving the ground for pulling out of the deal.

‘But the timing is curious given the lengths he’d gone to to secure financing for the deal. So, maybe some share holders in SpaceX and Tesla said they want his attention on his primary concerns there. This is straight out of the Musk play book, keeping shareholders on their toes.’

Analysts speculated that Musk is trying to negotiate a lower price for the deal or pull out completely

Analysts speculated that Musk is trying to negotiate a lower price for the deal or pull out completely

The implied probability of the deal closing at the agreed price fell below 50 per cent for the first time on Tuesday, when Twitter shares dropped below $46.75.

This week, a US firm which bets against company share prices said Musk could submit a lower bid for Twitter due to the slump in stocks and a poor financial performance.

Short-selling firm Hindenberg Research said there is a ‘significant chance’ the entrepreneur will try to pay less than the agreed $54.20 per share price which was accepted by the Twitter board.

The sharp drop in the Nasdaq stock market since the deal was struck implies a far lower value for Twitter, whose value is being propped up by the takeover bid.

In a document published Monday, the company said: ‘We are supportive of Musk’s efforts to take Twitter private and see a significant chance the deal will close at a lower price.’

They added that if Musk decides to walk away, Twitter shares could fall by as much as 50 per cent.

But the SpaceX founder could have to pay $1 billion just to walk away from the deal in a breakup fee. 

Twitter had said it faced several risks until the deal with Musk is closed, including whether advertisers would continue to spend on Twitter.

The announcement is another twist amid signs of internal turmoil over his planned buyout of Twitter, including that the social media company fired two of its top managers Thursday. 

Head of consumer product Kayvon Beykpour and general manager for revenue Bruce Falck were unceremoniously axed.

Twitter Head of Consumer Product Kayvon Beykpour said that he was fired on Thursday after the company's CEO told him 'he wants to take the team in a different direction'

Twitter Head of Consumer Product Kayvon Beykpour said that he was fired on Thursday after the company’s CEO told him ‘he wants to take the team in a different direction’ 

General manager for revenue Bruce Falck (pictured)has also been unceremoniously axed

General manager for revenue Bruce Falck (pictured)has also been unceremoniously axed

‘The truth is that this isn’t how and when I imagined leaving Twitter, and this wasn’t my decision. [CEO] Parag [Agrawal] asked me to leave after letting me know that he wants to take the team in a different direction,’ Beykpour said.

Musk also suffered from the huge Cryptocurrency crash this week.

He is one of four so-called ‘Crypto Bros’ whose combined gigantic wealth, which for years has helped prop up the online currency market, has now taken the most colossal hit despite believing crypto would be a safe haven during the pandemic. 

But more than $20billion has been wiped off the cryptocurrency market yesterday alone. 

Tesla, which took a $1.5billion gamble on Bitcoin last February, has already seen that investment fall flat with its estimated value already $300million lower than it was 15 months ago. 

Yesterday, it was also revealed the Tesla CEO’s Twitter purchase was being investigated by US regulators after he delayed reporting the buy – and thus failed to provide sufficient warning that a takeover bid was looming.

The 50-year-old’s first move towards buying Twitter was his purchase of a 9.2 percent stake in the tech company in mid February.

But he did not disclose his purchase to the Securities and Exchange Commission (SEC) until at least 10 days later, on April 4.

Any investor who crosses a 5 percent stake must file a form with the SEC within 10 days. It serves as an early sign to stakeholders that a big investor could seek to control the company.

Musk’s April 4 filing also characterized his stake as passive, meaning he did not plan to take over Twitter or influence its management or business.

The next day, however, he was offered a position on Twitter’s board, and a couple of weeks later, the world’s richest man had clinched a $44billion deal to buy the social media giant.

The SEC investigation was first reported on Wednesday by The Wall Street Journal. 

This week, Musk has also sparked fierce debate after saying he would allow Donald Trump back on Twitter if and when he takes the reins, in line with his previous declarations that he planned to err on the side of free speech rather than bans and censorship.

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