Musk threatens to pull out of Twitter acquisition deal, highlights three reasons

Elon Musk claims that he must overcome three major obstacles before completing his purchase of Twitter.

Earlier this year, Musk indicated strong interest to purchase Twitter for $44 billion, a massive deal with far-reaching consequences for the social media industry, not least considering Musk's divisive views on content control and freedom of expression.

However, the deal's fate has been increasingly questionable in recent weeks when Musk threatened to pull out, highlighting worries over the platform's high number of fraudulent accounts. If the billionaire abandons the arrangement, he might be hit with a $1 billion termination fee and potentially face litigation.

1.     Fake accounts: Musk has not failed to express his anxiety over the growing number of fraudulent Twitter accounts. Attempts to control social media sites with bogus profiles and bots aren't new, but Musk urges Twitter to be more transparent about how many of the user-accounts real. According to Twitter's disclosure requirements, the number of fraudulent or spam accounts makes up fewer than 5% of its "monetizable" daily active users. Musk remains skeptical.

Twitter's independent board chair, Bret Taylor, stated last week that the company's management remained "committed to the transaction under the agreed upon terms."

2.     Debt financing: According to Musk, the second significant stumbling point for the Twitter deal is the amount of debt needed to finance it.

Musk agreed to pay $33.5 billion in cash for the firm in May. He has also garnered $7.1 billion in equity investment pledges from investors like Larry Ellison, co-founder of Oracle, and Binance, a cryptocurrency exchange.

Musk claims that the rest of the money would come from bank loans, although it's unclear how that will work out. Although being the richest man in the world, Musk's fortune is heavily invested in Tesla shares. As security for the loans, he has given and guaranteed billions of dollars in Tesla stock.

3.     Shareholder approval: The approval of Twitter's shareholders is Musk's final major roadblock to completing his takeover. The acquisition is anticipated to be voted on by investors in late July or early August.

It's uncertain if Musk will be able to secure enough shareholder backing for the takeover. Last month, several Twitter stakeholders sued Musk and the company for the way the transaction was handled.

Twitter released a letter it got from Elon Musk's legal team earlier this month in a new SEC filing, expressing dissatisfaction with the company's given statistics on the number of "spam and fake accounts" on its site. This is the same worry that the tech mogul has expressed frequently since his deal to acquire the social media network was approved earlier this year.