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The Washington Post reported yesterday that the deal between Twitter (NYSE:TWTR) and Elon Musk is at serious risk of happening.
The report says Musk’s team has currently halted some discussions about funding for the $44 billion takeover, including talks with a likely backer.
Wedbush analyst Daniel Ives says the deal may eventually get completed at a lower price given that the Street is “highly skeptical” of a deal happening at the current bid.
“We believe the chances of a deal ultimately happening are currently at ~60% with a renegotiated bid at a lower price likely in the $42-$45 range due to the fake account issue. There is still a ~35% chance Musk decides to walk away from the deal, try to pay the $1 billion breakup fee, and likely end up in a nasty court battle with Twitter’s Board for the coming months. We believe $54.20 at this point is essentially out the window (5% chance) and the Street will be closely watching both the bot issue and the financing component of the deal,” Ives told clients in a note.
Separately, Twitter announced Thursday it has reduced 30% of its recruiting workforce as the social media giant continues to grapple with business challenges while its deal with Elon Musk remains “on hold”.
Twitter said in May it intends to halt hiring temporarily and seek ways to cut costs, a plan that now evolved into a restructuring of the company and layoffs in its hiring team which is estimated to affect less than 100 people.
Twitter’s representatives again reiterated that the number of spam accounts represents less than 5% of its daily monetizable users. However, Musk has previously disagreed with these claims, saying that he believes that number could be as high as 20%. He also said Twitter’s claims about the number of bot accounts were not reliable without evidence to back them.
Shares of Twitter are down over 4% today.
