Media quoted informed sources as saying that due to the uncertainty of the transaction, Tesla CEO Elon Musk's efforts to arrange new financing for the acquisition of twitter have been shelved According to the source, musk has been discussing the arrangement of preferred stock financing of $2billion to $3billion from a group of private equity companies led by Apollo Global Management Inc. but these dialogues are now suspended until the acquisition prospect becomes clear.
Musk had previously accused twitter of violating the acquisition agreement by not providing information about spam and false accounts, and threatened to terminate the transaction, unless twitter could prove that, as disclosed in the public documents, spam and false accounts accounted for less than 5%. Musk once estimated that false accounts accounted for at least 20%.
Twitter issued a statement saying that "it has cooperated and will continue to share information with musk," believing that this agreement is in the best interests of all shareholders, and "intends to complete the transaction and execute the merger agreement according to the agreed price and terms".
Musk believes that the company's refusal to provide more information is "a clear violation of Twitter's obligations under the merger agreement. Musk reserves all rights arising therefrom, including his right not to complete the transaction and the right to terminate the agreement."
The acquisition agreement included a $1billion breakup fee, but musk could not get away even if he paid the breakup fee. According to the original filing document, there is a specific clause in the merger agreement that allows twitter to force musk to complete the transaction. This may mean that if the transaction finally goes to court, twitter may get a court order requiring musk to complete the merger rather than lose money.
Since musk first proposed to acquire twitter in April, the deal has been deeply controversial. At present, Twitter's share price is lower than the acquisition offer of $54.20, which indicates that investors have relatively low confidence that the transaction will be completed at that price.