Twitter stock drops after report says Biden admin weighs in on Musk corporate security review
By Clare Duffy, CNN Business
Shares of Twitter fell as much as 8% in premarket trading on Friday as investors braced for last-minute uncertainty around Elon Musk’s $44 billion deal to buy the company.
The stock reaction, which rebounded later in the morning, followed a Bloomberg report that Biden administration officials are in preliminary talks about subjecting some of Musk’s businesses to national security reviews, including the planned takeover of Twitter. When asked by CNN, the administration pushed back against the report, which cites people familiar with the matter.
“We are not aware of any such conversations,” National Security Council spokeswoman Adrienne Watson said in a statement. A Treasury spokesperson said the Committee on Foreign Investment in the United States “does not comment publicly on transactions it may or may not review” in accordance with law and practice.
Among the equity investors who have pledged to provide funding to help Musk fund the deal are several foreign entities, including Qatar’s sovereign wealth fund and Saudi Prince Alwaleed bin Talal, who was already one of the biggest investors. of Twitter ahead of Musk’s proposed takeover.
In response to a tweet about the Bloomberg report, one user wrote, “It would be hysterical if the government stopped Elon from overpaying Twitter.” Musk replied to this tweet with a “100” emoji, which usually indicates emphatic agreement, and a crying, laughing face emoji.
It’s unclear what impact, if any, the reported security review could have on reaching a deal that has already been the subject of months of uncertainty. Musk still has a week to complete the deal or face a postponed lawsuit in the Delaware Court of Chancery that could force him to acquire the social media company.
Twitter declined to comment on the report on the possible review; Musk’s representatives did not immediately respond to a request for comment.
According to other accounts, the deal appears to be nearing completion. In a separate report late Thursday, Bloomberg said bankers and lawyers for Twitter and Musk are preparing the paperwork needed to close the deal. Bloomberg also reported last week that the company had frozen employee stock accounts in anticipation of the deal closing.
In a conference call this week to discuss Tesla’s results, Musk said he was “excited” about the Twitter deal, but also admitted he was “clearly paying too much” for it. “Twitter’s long-term potential, in my view, is an order of magnitude greater than its current value,” he said.
The Washington Post reported on Thursday that Musk had told potential investors in the deal that he planned to get rid of nearly 75% of the company’s staff, and that Twitter had already planned massive layoffs even if the deal was unsuccessful, citing internal documents and interviews with people familiar with the matter. Neither Twitter nor representatives for Musk responded to requests for comment regarding the layoff plans.
Following the Washington Post report, Twitter’s General Counsel Sean Edgett sent a memo to staff stating that the company “has no confirmation of the buyer’s plans post-closing and recommends not following the rumors or leaked documents, but rather to wait for the facts from us and the buyer directly”. “, according to a report by Bloomberg. A Twitter spokesperson confirmed to CNN the authenticity of the memo.
Musk previously discussed Twitter’s drastic downsizing in personal text messages with friends about the deal, which was revealed in court documents, and did not rule out the possibility of layoffs during a call with Twitter employees in June.
– CNN’s Matt Egan contributed to this report.
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