Twitter shares dropped after it was reported that the takeover by Elon Musk could be subject to a US national security review.
The report that the US government could use a key committee to review the takeover on national security grounds was severely negative for Twitter shares, which plunged more than 8 percent. Twitter shares were trading at $48.15 in pre-market trade.
Review by Committee on Foreign Investment
Bloomberg reported that the Committee on Foreign Investment in the United States would assess Musk's Twitter deal on multiple grounds.
It says that the government is concerned over Musk's recent threat to cut off Starlink satellite service in Ukraine. Another concern is that the group involved in the Twitter takeover includes investors from China and Saudi Arabia. There is also a perception that Musk has close ties in China, where Tesla's biggest and most important gigafactory is located.
The sentiment was also roiled by Snap's observation that ad spending is likely to drop in the next three months. The messaging app posted the slowest rate of revenue growth in its latest quarter and warned that there will be a pullback in global add spending.
Musk Looking to Close Deal
Meanwhile, it was reported on Thursday that Musk's Twitter buy would be closed before October 28, with his team working to complete the deal before the court-sanctioned deadline. Bloomberg reported that Musk's lawyers are holding late stage talks with the bankers, led by Morgan Stanley. The paperwork is expected to be completed before October 28.
This followed a dramatic reversal of stance from Musk earlier this month when he said was willing to buy the social media giant at the previously agreed price of $44 billion. Reports said Twitter acknowledged the move from Musk, putting the lid finally on the controversial takeover bid that was launched several months ago in April.
In a letter written by Musk's lawyers, the billionaire said he was willing to go ahead with the deal under which each share of Titter is valued at $54.20. He said the intention is to complete the transaction, pending receipt of the financing and a formal end of the legal fight.
Musk also shocked the industry saying that he was planning a mass layoff at Twitter following the completion of the deal to acquire the social media platform. The tech billionaire's cost cutting plan will see a whopping 75 percent of the Twitter workforce walking up the garden path, the Washington Post reported, citing sources.