Shares of Twitter dropped as much as 8% in pre-market trading Friday as investors braced for some last-minute uncertainty around Elon Musk’s $44 billion deal to buy the company.
The stock reaction, which rebounded somewhat later in the morning, followed a Bloomberg report that Biden administration officials are in early discussions about possibly subjecting some of Musk’s ventures to national security reviews, including the planned Twitter takeover. Asked by CNN, the administration pushed back on the report, which cited people familiar with the matter.
“We do not know of any such conversations,” National Security Council Spokesperson Adrienne Watson said in a statement. A Treasury spokesperson said that the Committee on Foreign Investment in the United States “does not publicly comment on transactions that it may or may not be reviewing” by law and practice.
Among the equity investor who committed to provide financing to help Musk fund the deal are several foreign entities, including the Qatar sovereign wealth fund and Saudi Arabian Prince Alwaleed bin Talal, who was already one of Twitter’s largest investors prior to 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 over paying for Twitter.” Musk responded to that tweet with a “100” emoji, which typically indicates emphatic agreement, and a crying laughing face emoji.
It’s unclear what, if any, impact the reported security review could have on completing a deal that has already been subject to months of uncertainty. Musk has one week remaining to close the deal or face a rescheduled trial in the Delaware Court of Chancery that could result in him being forced to acquire the social media firm.
Twitter declined to comment on the report about the possible review; representatives for Musk did not immediately respond to a request for comment.
By other accounts, the deal appears to be moving toward completion. In a separate report Thursday evening, Bloomberg said that bankers and lawyers for both Twitter and Musk are preparing the paperwork needed to complete the deal. Bloomberg also last week reported that the company had frozen employees’ stock accounts in anticipation of the deal’s completion.
On a conference call this week to discuss Tesla’s earnings results, Musk said he was “excited” about the Twitter deal, but also admitted that he is “obviously overpaying” for it. “The long-term potential for Twitter, in my view, is an order of magnitude greater than its current value,” he said.
The Washington Post on Thursday reported that Musk told prospective 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 did not go through, citing internal documents and interviews with people familiar with the matter. Neither Twitter nor representatives for Musk responded to requests for comment regarding layoff plans.
Following the Washington Post report, Twitter General Counsel Sean Edgett sent a memo to staff saying the company does “not have any confirmation of the buyer’s plans following close and recommend not following rumors or leaked documents but rather wait for facts from us and the buyer directly,” according to a report from Bloomberg. A Twitter spokesperson confirmed to CNN the authenticity of the memo.
Musk had previously discussed dramatically reducing Twitter’s workforce in personal text messages with friends about the deal, which were revealed in court filings, and didn’t dismiss the potential for layoffs in a call with Twitter employees in June.