Elon Musk says Twitter takeover ‘on hold’, sending shares tumbling – business live

Full story: Twitter takeover temporarily on hold, says Elon Musk

Dan Milmo

Dan Milmo

Elon Musk has said his $44bn takeover of Twitter is “temporarily on hold” after the social media platform claimed that less than 5% of its users were spam or fake accounts.

The Tesla chief tweeted on Friday morning that the deal was being frozen while he awaited details behind Twitter’s assertion.

Musk announced the move alongside a link to a Reuters article published on 2 May that referred to a filing with the US financial regulator, in which Twitter claimed that false or spam accounts represented less than 5% of its daily average users.

Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn

— Elon Musk (@elonmusk) May 13, 2022

Musk has railed at automated Twitter accounts – which are not run manually – and said after announcing the takeover that he wanted to improve the platform by “authenticating all humans”. He has agreed to pay a $1bn break fee to Twitter if he walks away from the deal.

The news sent Twitter’s shares down about 23% in pre-market trading, on concerns that the deal could collapse.

More analysis from Wedbush’s Dan Ives:

The implications of this Musk tweet will send this Twitter circus show into a Friday the 13th horror show as now the Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away with a $1 billion breakup fee

— Dan Ives (@DivesTech) May 13, 2022

In our opinion, with the nature of Tesla shares being used as leverage for Musk in the deal, the massive sell-off seen in Tesla and the overhang created by this deal has turned into a life of its own. The initial reaction will be positive for Tesla shares as a relief.

— Dan Ives (@DivesTech) May 13, 2022

Mirabaud: the Twitter tragi-comedy continues

The whole situation is ‘farcical’, and Twitter’s board must take some of the blame.

So explains Neil Campling, head of TMT research at Mirabaud Equity Research:

“The tragi-comedy continues and the Twitter situation is nothing short of laughable. We’d always said Musk may cut or run or change his tune at the 11th hour and 59 minutes and 59 seconds on the clock. We’re not even close to the 11th hour yet. Farcical.

Musk has never had the full funding – we know that from his constant attempts to get financial support – but he also held all the cards. The Twitter board have been held hostage and only have themselves to blame for this mess. No other buyer will emerge – if Musk decides he is still interested he can “name his price”… and it won’t be higher!

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 Musk had the financing – which, of course, he doesn’t.”

Elon Musk may be having second thoughts about the deal, says John Colley, Associate Dean at Warwick Business School:

‘Fake accounts’ were always a likely issue, but didn’t dissuade him from launching his bid. Bringing it up now may just be an excuse to withdraw gracefully.

“Maybe the true cost and extent of the risk involved in turning around a ‘break even’ Twitter may have dawned on Elon Musk. After all, $43Bn for what may be little more than a sideline does seem excessive. The collapse in Tesla’s shares following the original offer announcement underlines what the markets think.”

Musk’s move will be ‘highly frustrating’ for many at Twitter, says Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

‘’Musk’s Twitter takeover was always destined to be a bumpy ride, and now it risks hitting the skids over the number of fake accounts on the platform. Twitter’s share price plunged by around 18% in pre-market trading following his tweet indicating the deal was temporarily on hold.

He is clearly intent in querying the company’s estimate that spam accounts make up less than 5% of active daily users – a key metric given that establishing an accurate number of real tweeters is considered to be key to future revenue streams via advertising or paid for subscriptions on the site.

This is likely to come as highly frustrating for many in the company given that a number of senior executives have already been laid off in expectation of the takeover and the change in direction he was expected to pursue.

Twitter’s head of consumer product, Kayvon Beykpour, and head of revenue, Bruce Falck are among the departures.

Beykpour, who joined when Twitter bought his Periscope live video service, learned he was leaving while on paternity leave.

Interrupting my paternity leave to share some final @twitter-related news: I’m leaving the company after over 7 years.

— Kayvon Beykpour (@kayvz) May 12, 2022

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

— Kayvon Beykpour (@kayvz) May 12, 2022

Also, what’s Musk’s real motive, Streeter adds:

There will also be questions raised over whether fake accounts are the real reason behind this delaying tactic, given that promoting free speech rather than focusing on wealth creation appeared to be his primary motivation for the takeover.

The $44bn price tag is huge, and it may be a strategy to row back on the amount he is prepared to pay to acquire the platform.’’

“This is a full on Friday the 13th circus show”

Wedbush Securities analyst Dan Ives says it’s “a full on Friday the 13th circus show”.

Speaking to CNBC’s SquawkBox show as news broke that the deal was on hold, Ives called Musk’s move ‘a shocker’.

He explained it’s not OK to simply put a deal on hold with a tweet. You’d expect a regulatory filing with a deal of this type, or something else more formal.

Ives explains.

To come out in a tweet, it sends this whole thing into a circus show.

Because now, the Street’s initial reaction is going to be, ‘he’s looking for a way to get out of this deal’.

Ives points to the big fall in Tesla’s share price (down a quarter in the last month). The deal’s finances included a margin loan secured against some of Musk’s Tesla shares.

Ives also points out that Twitter’s filing, stating false or spam accounts represented fewer than 5% of daily users, came out on May 2nd, so isn’t a sudden development.

Parmy Olson of Bloomberg Opinion has a good take too:

Elon Musk taking a step that *could* lead to him walking away completely from his Twitter deal here, saying it’s “temporarily on hold.” 👇

If Musk is looking for a way out, he may point to the proliferation of spam bots. https://t.co/1qMk5eA2Pv

— Parmy Olson (@parmy) May 13, 2022

The big question: is he joking?? Well #TWTR just dropped 20% #TSLA up 5%. So investors think this is real. Of course, the market has been burned before by Elon, see: https://t.co/63hVX95SH8

— Parmy Olson (@parmy) May 13, 2022

If real, this is truly weird. Purging spam bots was Musk’s top objective in buying Twitter. Now he’s positioning himself to argue the problem is worse than he was led to believe?

Twitter said they represent less than 5% of daily users. Musk now wants more evidence, “or else.”

— Parmy Olson (@parmy) May 13, 2022

Musk said a few weeks ago that he would “defeat the spam bots or die trying.” https://t.co/VMK8NMv3g6?

Now he sounds a lot less enthusiastic about that, because the ACTUAL BID hinges on how bad the spam bots are.

— Parmy Olson (@parmy) May 13, 2022

There are many good reasons why it’s in Musk’s best interests to drop this deal, eg:

– It’s going to be extremely hard to reach his profitability target for Twitter
– The deal is killing Tesla shares

But it looks like he could use spam bots as a public excuse to walk away.

— Parmy Olson (@parmy) May 13, 2022

Could Musk be looking for a way out of the Twitter deal, given recent market turmoil, or possibly to reprice it?

Tech stocks have slumped since he revealed his stake in Twitter at the start of April, so that $44bn offer could now look too high.

New York Times financial editor Anupreeta Das points out that Twitter’s shares never reached Musk’s offer, reflecting doubts about the deal:

It’s hard not to immediately consider the fact that there’s been a market bloodbath in recent days, and every buyer is probably examining whether the price they offered to pay looks too rich.

— Anupreeta Das (@PreetaTweets) May 13, 2022

Twitter’s shares are down 25% pre-market, which is not surprising. But the shares never came close to Musk’s $54.20 offer price to begin with, reflecting the doubt in investors’ minds that the deal would actually close.

— Anupreeta Das (@PreetaTweets) May 13, 2022

Elon Musk says Twitter deal is on hold until he gets more information about fake accounts

Just in: Elon Musk’s $44bn deal to buy Twitter is “temporarily on hold” until he gets more information about fake accounts on the platform.

The billionaire has tweeted that the deal is on hold, waiting for details supporting the calculation that fake and spam accounts represent less than 5% of the users on its platform, as Twitter said in a filing earlier this month.

Musk linked to a Reuters report from May 2, which said Twitter estimated that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter.

Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn

— Elon Musk (@elonmusk) May 13, 2022

The news has sent Twitter’s shares plunging around 23% in pre-market trading, on concerns that the deal could collapse.

They’ve on track to open at $34.60, down from around $45 last night, and away from Musk’s agreed offer of $54.20.

Musk has previously said that one of his priorities once he bought Twitter would be to remove “spam bots” from the platform.

But he also warned earlier this week that the deal would take at least another two months to complate, and was “not a done deal.”

That takeover has already led Twitter to announce a hiring freeze, and the departure of two top leaders in a major shakeup.

Eurozone industrial production declines as Ukraine war takes toll

Factory output across the eurozone fell in March, as rising input prices and supply chain disruption due to the Ukraine war hit the sector.

Industrial output from factories, mines and utilities across the region declined by 1.8% in March – the first full month of the conflict – compared with February, and were 0.8% lower than a year ago.

Production of capital goods fell 2.7%, suggesting demand for heavy duty machinery, equipment, vehicles and tools declined as economic uncertainty rose.

Production of non-durable consumer goods declined 2.3%, while intermediate goods (used to make goods for sale) dropped 2.0%, and energy fell 1.7%. But production of durable consumer goods rose 0.8%.

Germany saw one of the largest monthly declines, with production down 5%, along with Slovakia (-5.3%) and Luxembourg (-3.9%), while the highest increases were observed in Lithuania (+11.3%), Estonia (+5.1%), Bulgaria and Greece (both +5.0%).

Euro area industrial production -1.8% in March (-2.0% expected).

Bad news, Germany is among the biggest losers, reporting 5% lower production. pic.twitter.com/HoQPDoigLA

— Growth & Value (@Growth_Value_) May 13, 2022

‘Golden era’ of cheap food is ending, says ex-Sainsbury’s boss

Kalyeena Makortoff

Kalyeena Makortoff

The UK’s “golden era” of cheap food is coming to an end, the former Sainsbury’s boss Justin King has warned, saying households should be prepared for higher grocery bills in the long term.

King claimed supermarkets could not be expected to absorb the extra costs entirely or protect consumers from rising prices, despite having announced higher earnings, as their net profit margins are only around 3%.

Instead, shoppers must making hard choices on how they spend their money, particularly as soaring inflation – made worse by the ripple effects of the war in Ukraine – pushed up prices on supermarket shelves.

King told BBC Radio 4’s Today programme

“We have been perhaps through a golden era. We spend much less as a proportion on average of our household budgets on food than we had almost any time in history, and that’s been [on] a long, gentle decline. So I suspect what we will see is a higher proportion, across the piece, spent on food for the longer term.

“It won’t actually be that high in historical terms but it will require adjustments in terms of how we all prioritise our family budget spending,” King added.

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