A dramatic legal battle looms after tech billionaire Elon Musk announced he was giving up on his $64 billion deal to buy Twitter.
A messy legal battle ensues after Elon Musk announced he was ending his deal to buy social media platform Twitter, citing an irreconcilable disagreement with the company over fake and spam accounts.
The richest man in the world has previously accused Twitter of “resisting and thwarting” its attempts to access information about fake accounts, saying the deal could not go through until the issue was resolved.
Mr. Musk claims that up to 20 percent of the 229 million Twitter users could be fake. The company itself maintains that the true figure is about 5 percent.
“Mr. Musk is terminating the merger agreement because Twitter is materially infringing multiple provisions of that agreement, (and) appears to have made false and misleading statements on which Mr. Musk relied in entering into the merger agreement,” the Tesla and Attorneys said. from the CEO of SpaceX wrote in a letter to Twitter.
Twitter shares fell 6 percent during extended trading on Friday, as weeks of speculation that the deal was in danger continued to grow.
In response to Mr. Musk’s bid to pull out, Twitter chairman Bret Taylor indicated the company would go to court in an attempt to force him to go through with the deal.
“The Twitter Board is committed to closing the transaction at the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement,” Mr Taylor wrote in a social media post. , retweeted by Twitter CEO Parag Agrawal.
“We are confident that we will prevail in the Delaware Court of Chancery.”
Meanwhile, an anonymous Twitter employee told NBC News that Mr. Musk’s decision felt like something of a victory.
“I think it feels like we’ve won. But it feels like the end of the movie, where the characters are bloodied and disheveled with a Michael Bay explosion behind them,” the worker said.
“We could see this was coming, but in the meantime, he’s fucking ruined the company.”
The New York Times reports that an internal memo was sent to Twitter employees, asking them not to comment publicly or privately.
“As this is an ongoing legal matter, please refrain from tweeting, slacking or sharing comments about the merger agreement,” the company’s general counsel wrote.
Musk’s reason for withdrawing
In their letter, addressed to Twitter’s Chief Legal Officer Vijaya Gadde and revealed by a filing with the U.S. Securities and Exchange Commission, Mr. Musk’s attorneys alleged that the company had breached its obligation to provide him with the information requested “for any reasonable business purpose related to the completion of the transaction”.
“Twitter has failed to fulfill its contractual obligations. For nearly two months, Musk has searched for the data and information needed to “make an independent assessment of the prevalence of fake or spam accounts on the Twitter platform.” This information is fundamental to Twitter’s business and financial performance and is necessary to complete the transaction,” attorney Mike Ringler said.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that seem unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or useless information.”
He said Mr Musk had made “numerous follow-up requests” aimed at “filling in the gaps in the full information provided by Twitter”.
In summary, Twitter has not provided information that Mr. Musk has requested for nearly two months, despite his repeated, detailed clarifications designed to simplify Twitter’s identification, collection and disclosure of the most relevant information.
“Since Twitter has been aware of the breach (of the merger agreement) as of at least June 6, any recovery period offered to Twitter under the agreement has now expired. Accordingly, Mr. Musk hereby exercises (his) right to terminate the Agreement and waive the transaction contemplated thereby.”
Mr. Musk, who has a net worth of approximately $380 billion, announced his plan to buy Twitter in April and proposed to acquire all of his outstanding common stock for $54.20 per share.
Earlier this month, he had bought a 9.2 percent stake in the social media company, making him the largest individual shareholder.
Twitter chief executive Parag Agrawal later revealed that Mr. Musk had turned down an offer to join the company’s board of directors — a move that would have prevented him from acquiring more than 14.9 percent of the company’s shares. triggering the first wave of takeover speculation.
“I invested in Twitter because I believe in its potential to be the platform for free speech around the world, and I believe that freedom of speech is a societal necessity for a functioning democracy,” Musk said in a letter to the United Nations. board of Twitter about his purchase proposal.
“However, since I made my investment, I now realize that the company will not thrive in its current form and will not serve this social need. Twitter should be turned into a private company.
“As a result, I am offering to buy 100 percent of Twitter for $54.20 dollars a share in cash, a 54 percent premium the day before I started investing in Twitter and a 38 percent premium the day before. my investment was publicly announced.
“My offer is my best and last offer and if it is not accepted I would have to reconsider my position as a shareholder. Twitter has extraordinary potential. I’ll unlock it.”
The Twitter board approved the deal after Mr. Musk unveiled a financing package that included $21 billion of his personal fortune.
Mr Agrawal posted a thread on social media at the time explaining the company’s stance on the matter. Mr. Musk responded with a poo emoji.
Mr. Musk, who has become one of Twitter’s most powerful users with his posts that regularly spark wild swings in stocks and cryptocurrency markets, has emerged as an outspoken critic of the platform’s business practices and policies in particular. for content moderation.
Since taking a major share, he has tantalized Twitter and its employees with a series of provocative messages, reportedly causing widespread unrest within the company and prompting executives to grant staff a planned “day of rest.”
In one, he polled whether Twitter’s San Francisco headquarters should be turned into a “homeless shelter since no one shows up anyway.”
More than 91 percent of respondents, or 1.9 million people, selected ‘yes’.
He also approvingly shared a video of legendary activist investor Carl Icahn telling a story of how he “fired 12 floors of people” after acquiring a company early in his career.