The whole world watched several weeks ago, when Elon Musk agreed to purchase and privatize Twitter for a sum of $44B. But now that the stocks of both Tesla and Twitter are plummeting, Musk seems to be having second thoughts about completing the deal. Judging from comments he has recently made, and the way he is dragging his feet, it certainly looks as though he is trying to find a way out of his contract. 


One of the big sticking points for Musk is the proliferation of fake accounts on Twitter. Earlier this week, Musk said that he will not move forward with the deal unless current Twitter CEO Parag Agrawal could prove to him that the platform has fewer than 5% fake accounts. He also intimated that he could renegotiate the deal for a lower price, according to a Bloomberg report


Twitter, however, wants to move full speed ahead on the deal as planned, and expects Musk to pay up. ​​“Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable,” it said in a Securities and Exchange Commission filing, referring to Musk’s offer to take the company private. They also said it is impossible for any company to catch all spam, no matter who is at the helm.


The Twitter board is committed to the original deal that was made, saying that $54.20 a share was a fair deal. Unfortunately for Musk, the shares are now holding at $38.32, a 30% decrease from his original offer. This is likely the reason for his cold feet.


The Twitter board also implied that Musk did not do his due diligence in learning more about the intricacies of Twitter’s business before his April 25 offer to take the company private. This includes researching the number of spam accounts that Twitter has, which Musk certainly could have done before he signed to purchase the company. 


Advisor to Berkeley Capital, Adnan Zai agrees that Musk should go through with the deal as planned. “Musk trying to play (read: renegotiate) with Twitter and ask for something that was not outlined at the onset is unfair. Just because his Tesla stock now has taken a hit along with all other tech stocks, should not allow him to back out just because his financing costs are now more.”


The ball seems to be in Twitter’s court now, as both sides had signed an agreement whose terms and conditions indicate that the deal needs to be closed out by October. Failure to do so will result in a $1B penalty for whichever side does not honor the agreement. Twitter could also invoke a “specific performance clause” to force Musk to close the deal, if all the financial parameters are in place. 


The world will continue to watch to see how this deal plays out, and whether Twitter becomes privatized after all.