Twitter (TWTR) takeover deal in ‘temporarily on hold’, says Elon Musk

Highlights

• The billionaire mogul last week revealed that he secured an additional US$7-billion from new investors for his US$44 billion takeover of the company.
• After Musk’s tweet, Twitter (TWTR) shares fell more than 18% in the premarket.
• Musk said he wants Twitter to reduce its reliance on ads and become a free speech platform.

Tesla CEO Elon Musk has said that his Twitter takeover deal is "temporarily on hold", pending an evaluation of the number of fake accounts on the social media platform.

The billionaire mogul last week revealed that he secured an additional US$7 billion from new investors for his US$44-billion takeover of the company.

Musk has now tweeted the deal is on hold temporarily to ascertain whether the number of spam accounts on the platform “do indeed represent less than 5% of users”.

The company had earlier estimated that fake accounts could be less than 5% of Twitter’s daily active monetized subscribers.

After Musk’s tweet, Twitter (TWTR) shares fell more than 18% in the premarket.

Musk, the world's richest man, said that one of his top priorities after the Twitter acquisition would be to rid the platform of "spambots". However, there have been concerns about whether Twitter advertisers would continue to spend on the platform after the takeover.

Twitter had initially tried to distance itself from Musk's offer, stating that it adopted a "poison pill" strategy to resist the takeover. But investors urged Twitter to reconsider the proposal.

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Musk’s Twitter plans

Musk said he wants Twitter to reduce its reliance on ads and become a free speech platform. He also said that he would revoke the Twitter ban on former US President Donald Trump. He also plans to add new features like introducing an edit button and allowing longer tweets.

The SpaceX founder will also require US$21 billion in cash that he can raise by selling some of his Tesla shares. Additionally, he would use his US$60-billion Tesla stocks as collateral for bank loans.

Days after he sealed the Twitter deal, Musk said that he sold about US$4-billion worth of his Tesla stocks. He had already divested over US$20 billion of his Tesla stocks in the last six months.

The Tesla (TSLA) stock fell 39.32% YTD, while Twitter (TWTR) returned 5.67% gains in the same period.