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Twitter shares: Elon Musk pulling out of acquisition deal?

Tesla CEO, Elon Musk, is reportedly close to withdrawing from the bid to buy Twitter. However, the proposed deal commits Musk to a cancellation payment of $1 billion, which the report also says he wants to avoid paying.

(Video Transcript)

Musk's Twitter acquisition deal in jeopordy?

According to reports late last night from The Washington Post, Tesla founder, Elon Musk, is close to pulling out of the deal to buy Twitter for $44 billion.

Let's take a look at where we are in terms of what we're hearing from The Washington Post, according to unnamed sources quoted by the paper. There's going to be a change in direction from Musk's team soon and Musk has stopped engaging in certain discussions about funding the deal.

However, others involved, such as Oracle founder, Larry Ellison, Sequoia Capital, Andreessen Horowitz, Binance and Fidelity all according to this report, still on board for financing after signing the deal in early May.

Share price reaction

Let's take a look at the share price reaction. These are hourly candles and you can quite clearly see here this pullback that we had in yesterday's trade at the exact time that this report came out on the wires.

And it was after the close of the US session yesterday so we haven't yet seen that negativity built in to today's cash session on the IG platform. Twenty-four hour coverage here or 18-hour coverage, we thought a further drop down around about one fifth of 1% on from the declines we saw yesterday.

This black line here at 3915 was the point at which we then initially heard of Musk's interest in Twitter. And you can see this is the upside. So we are trading below that level.

So if the deal is called off, I don't think it's necessarily going to be much more downside to go from where we are at the moment. This blue dotted line is the target price that Musk was talking about - $54.20 equal to $44 billion.

So at the moment at least we've got Twitter remaining under the trade it was at when we first heard about this deal and according to the Washington Post, it may soon fully be announced that it's over.

The one other item to be finished here, the terms of the original merger agreement include a stipulation that Musk would be liable for $1 billion payment to Twitter if he backs out of the deal.

TechCrunch is reporting that Musk is also combing through the fine print there to look for ways out of that.

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