In a nutshell: Elon Musk appears to be living up to his earlier threats to walk away from the $44 billion deal to buy Twitter. SpaceX’s CEO’s legal team has filed a letter with securities regulators alleging that the media giant and Musk entered into the purchase agreement based on false and misleading statements. Unfortunately for Musk, Twitter’s board of directors disagrees and is preparing to take legal action to hold him accountable for the multi-billion dollar price tag originally negotiated.
The letter, archived by Musk’s legal counsel on Friday, alleging that Twitter’s representatives have failed to fulfill contractual obligations to provide information about the prevalence of bots, spam accounts and other bogus accounts on the platform. Mike Ringler, the representative of Musk’s legal team, says Twitter has repeatedly ignored requests for information, gave unwarranted denials to questions, or responded to Musk with incomplete or inaccurate information while claiming to have complied with the full disclosure. .
Musk’s claims that Twitter has not provided any account-related data is nothing new. The statements date back to May, when the outspoken CEO stated that the acquisition had been delayed until Twitter provided facts to support claims in an earlier published Reuter article. Musk and his team remain adamant that the information is needed to conduct a thorough analysis of bots and other fake accounts on the social media platform.
Twitter representatives don’t seem to condone the allegations. Despite claims that the media platform is withholding information relevant to the negotiated acquisition, Twitter’s head of board of directors, Bert Taylor, was clear that the company would take legal action and intend to exit the previously negotiated acquisition terms. force.
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. We are confident that we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
While the outcome is yet to be determined, news of Musk’s intent seems to have already impacted Twitter’s results. Financial data showed stock prices plunged between 5% and 6% on the heels of his statements.
There is no legal guarantee that Musk will be allowed to walk away from the already-negotiated multi-billion-dollar deal. Under the standing agreement, Twitter or Musk could be held liable for a $1 billion break-up fee if either party renounces the agreed-upon offer.
There are also several other possible outcomes ranging from a renegotiated purchase price or a breakup to punish to another bidder who resigns in an attempt to take over the acquisition. Any guesswork about the outcome will be nothing more than speculation until more information becomes available.