Updated at 6:46 am EST
Twitter (TWTR) – Get Twitter, Inc. Report shares plunged lower in pre-market trading after Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk said his $44 billion takeover of the social media group was “temporarily on hold”.
Musk made the declaration through his verified Twitter account early on Friday in response to a Reuters story from May 2. The story, based on a Twitter 10-Q filing with the Securities and Exchange Commission, stated that Twitter had 229 million users who viewed consistent ads, adding that fewer than 5% of its so-called ‘monetizable daily active users’ were false or spam accounts.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk said.
Others have suggested that the $400 billion decline in Tesla shares since Musk unveiled his plans to purchase Twitter in early April has given the world’s richest man pause, given his reliance on their value to fund the $44 billion deal.
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Musk has been looking to alter the financing of his ‘take private’ deal on a number of occasions, bringing in new equity investors and reportedly soliciting others to reduce the exposure of the $62.5 billion worth of Tesla shares he’s pledged against margin loans,
Twitter shares 17% lower in premarket trading to indicate an opening bell price of $37.45 each. Tesla shares, meanwhile, surged 5.7% to $769.50 each.
Last week, Musk said he’s received equity commitment letters from various investors, including Sequoia Capital, that totaled $7.14 billion, to aid his $44 billion Twitter takeover, a move that ostensibly both reduced the cost Musk would provide from his personal fortune — much of it linked to the value of Tesla shares — to complete the transaction while boosting the overall equity portion of the proposed takeover to $27.45 billion.
The filing also noted that Prince Alwaleed Bin Talal of Saudi Arabia, a significant Twitter shareholder who had previously dismissed Musk’s $54.20 per share bid for the group as “not even close” to its fundamental value, will contribute 34.95 million of his shares and retain an equity commitment in the group after its privatized.