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Elon Musk’s Tweets May Be Aimed At Forcing Twitter Management Back To Negotiation Table

File Photo of Tesla CEO Elon Musk.

THE world’s richest man Elon Musk seems to have developed cold feet over his deal to buy microblogging site Twitter for US dollars 44 billion.

Yesterday, the billionaire tweeted, that he was putting the deal to buy Twitter “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users”. He later asserted he was “still committed to acquisition”.

But that didn’t help much to control the free-fall that Twitter stock went into after his first tweet.

When the mercurial businessman, who has often profited from sending conflicting signals on his social media handles, announced that he was buying Twitter, many wondered if he had, for once, made a bad move, one that he was making more to satisfy his ego than business sense.

If he walks out of the deal, he will have to pay US dollars 1 billion to Twitter as “breakup fees”.

But, if Twitter wants to battle it out with him and make his life difficult, it can sue him for breach of contract – after all, he did decide to buy the company without adequate due diligence. His repeated statements after the deal was made public have dragged the Twitter stock down and he may be trying to find a way out of the mess, much of which is his own creation, or bring Twitter back to the negotiation table for a lowering of the sale price.

While he mulls his future with Twitter, Musk’s main focus must be on his main company – Tesla, whose shares have also been on the slide ever since the deal with Twitter; they are down over 24 per cent in the last one month also while Twitter shares are down over 23 per cent from the sale price of US Dollars 54.20 per share.

He may be known for often shooting his mouth, but is no fool. He knows, in the long run, it may be a better business for him to lose US Dollars 1 billion – small change when one considers that his net wealth is over 220 billion US Dollars – than lose several times more by sticking to his Twitter deal.

However, it is easier said than done: if he does dump the Twitter deal, Musk would lose more than just face – he would not find it easier to gain the trust of future investors and potential companies in case he goes company-hunting again in the future.

My guess is he is trying to force Twitter back to the negotiation table to get the deal value lowered to a more reasonable valuation, thus saving money as well as face. Will that happen?

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