Elon Musk says his deal to buy Twitter is on hold
London (CNN Business) Elon Musk said he is putting his bid to acquire Twitter ( TWTR ) on hold, weeks after agreeing to take the company private in a $44 billion deal.
"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," Musk tweeted on Friday.
The news initially sent Twitter shares down more than 20% in pre-market trading before the stock rebounded somewhat.
But it acknowledged that the measurements were not independently verified and the actual number of fake or spam accounts could be higher.
Musk would owe Twitter a $1 billion breakup fee if he were to cancel the deal.
"The Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1 billion breakup fee," Ives wrote.
"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."
Stocks — tech in particular — have been sharply lower since Musk and Twitter reached a deal on a purchase of the the company nearly three weeks ago.
As part of the deal, Musk agreed to consult with Twitter before making any public statements about the deal, and to avoid making any tweets that "disparage the company," according to filings with the SEC.
Musk's sale of a significant number of Tesla shares to help finance his Twitter deal had also put pressure on the carmaker's stock.
Tesla TSLA Ives said the news about the Twitter deal was good forshares, which roared 6% higher in premarket trading Friday.
But the drop in the value of Tesla shares had raised doubts if he would be able to move forward with the financing of the Twitter deal.