Friday 13 May 2022 09:20 PM Twitter CEO Parag Agrawal insists that he still expects Musk's acquisition to ... trends now

Twitter CEO and board member Parag Agrawal has insisted that he still expects Elon Musk's $44 billion acquisition of the company to close, after the billionaire threw the deal into doubt by tweeting that it was 'temporarily on hold'.

In a lengthy Twitter thread on Friday, Agrawal wrote: 'While I expect the deal to close, we need to be prepared for all scenarios and always do what’s right for Twitter.'

Agrawal also addressed his move on Thursday to fire two top Twitter execs, saying that he is 'accountable for leading and operating Twitter, and our job is to build a stronger Twitter every day.' 

It came hours after Musk in a surprise move sent sent Twitter stock plunging by casting doubt on his takeover, as analysts speculated that he was trying to negotiate a lower price for the deal or pull out completely.

The remarks sent Twitter shares plunging, and they closed down nearly 10 percent for the day, with Agrawal's comment late in the session having little impact. 

Citing a week-old regulatory filing from Twitter, Musk claimed that he wanted to pause the deal to verify that false or spam accounts represented fewer than 5 per cent of the company's 229 million users during the first quarter.

Backpedaling a few hours later, Musk tweeted that he was 'still committed' to the acquisition, which had not been expected to formally close for several months. 

If he walked away from the deal, Musk would likely be on the hook for a $1 billion termination fee, and Twitter could also sue to enforce the terms of the merger agreement that both sides signed on April 25.

Though Twitter's board agreed to the purchase last month, it still has not been approved by shareholders, and was not expected to close for at least several months. The legal and practical implications of Musk's tweets were unclear. 

Shares of the social media company fell as much as 25 percent in premarket trading this morning, continuing a massive downward trend since his takeover bid was accepted by Twitter's board on April 25.

The world's richest man threw the deal into chaos by tweeting: 'Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.' 

He linked a Reuters report from May 2 stating Twitter's calculation that bots were only a small percentage of the site's users.

Musk had said that one of his priorities would be to remove 'spam bots' from Twitter once his takeover of the company was complete. 

It is not clear what the legal effect of his tweet was, and some analysts were baffled that he announced the move on Twitter rather than a regulatory filing.

Wedbush analyst Dan Ives called Musk's tweet 'bizarre' and said that it 'now sends this whole deal into a circus show with many questions and no concrete answers.' 

'Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,' Ives wrote in a note.

'If Musk does decide to still go down the deal path a clear renegotiation is likely on the table,' he added. 

Twitter's share price has been sinking following the April 25 announcement that Twitter's board had agreed to his buyout, when stocks closed at $51.70.

The stock closed at $45.08 on Thursday and plunged in pre-market trading Friday following Musk's tweet, dropping as much as 13 percent. 

Twitter did not immediately respond to a request for comment. 

Meanwhile, Tesla shares, against which Musk has secured $6.25billion in funding for the acquisition, were up about 5 percent early Friday.

Tesla stock has been slumping, and is down 28 percent in the past month, amid investor concern that the Twitter deal will divide Musk's attention, and that financing issues would force him to dump more of his Tesla holdings. 

The decline in Tesla's share price has increased concerns about Musk's ability to finance the Twitter deal. At Thursday's closing price, Musk would have to put up more than a quarter of his Tesla shares to secure the $6.25 billion margin loan. 

Analysts questioned why Musk would suddenly express concern about Twitter's estimate that 5 percent of accounts are fake, an estimate that the company has included in regulatory filings for years. 

Susannah Streeter, an analyst at Hargreaves Lansdown, said: 'This 5% metric has been out for some time. He clearly would have already seen it... So it may well be more part of the strategy to lower the price.

'It's going to be highly frustrating for many in the company given that a number of senior executives have already been laid off,' she said.