The numbers forcing Elon Musk to quit his Twitter deal
Billionaire entrepreneur Elon Musk officially wants out of his attempt to acquire Twitter for USD44 billion. In a letter to the social media company, lawyers cited the lack of detailed information on the number of bots on the platform — something he did not require to know when he agreed to the deal. But Twitter chairman Bret Taylor seems convinced that his company will be able to enforce the merger. So, what to make of all this business?
Well, for starters, it should be noted that the owner of Tesla and SpaceX is currently estimated to have a net worth of just under USD230 billion according to the Bloomberg Billionaires Index. That's tracked down, however, from a peak valuation of USD340 billion back in November.
Musk's troubles seem aligned or at least on par with most market watchers' as they react to the Federal Reserve's strategy to manage soaring inflation. The central bank has been raising interest rates since March from effectively 0% up to 1.75%, raising the cost to borrow money — you might have seen or even be paying on higher loan or credit rates right now.
Considering that Musk is paying more than half of the deal off with loans, he and the company would have been saddled with debt that's becoming more expensive to pay off going forward. It seems all the numbers are headed in the wrong direction for the time being.
Twitter stock has also been on the same slide as everyone else, though it was profoundly affected when Musk announced he was putting the acquisition "on hold." Back when it was initially announced on April 25, TWTR floating around USD51.70 per share; by the end of New York after-hours trading on Friday, it had dropped to USD35.01, reflecting a tumble of 32%.
Musk's lawyers have also noted Twitter's "declining business prospects and financial outlook" as a distinct justification for him to exit the deal. Per the agreement, he would give the company USD1 billion to do so. Alas, it looks like Twitter wants to challenge him for every cent he's staked here.
Of course, there are other stakeholders in this deal, but we'll leave that to be covered in another story.
( Details and picture courtesy from Source, the content is auto-generated from RSS feed.)
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