Elon Musk Says He’s Terminating Deal To Buy Twitter: After Twitter failed to give sufficient details regarding the number of false accounts, Elon Musk stated Friday that he will withdraw his contentious $44 billion offer to purchase the social media platform. Twitter promptly responded, announcing that it would sue the CEO of Tesla to uphold the agreement.
The acquisition’s likely unraveling was just the most recent development in a drama between the richest man on earth and one of the most significant social media platforms, and it may signal the start of a protracted court struggle.
Under these conditions, Twitter might have pushed for the $1 billion breakup fee Musk agreed to pay. Instead, it appears prepared to close the deal—which Chief Executive Parag Agrawal has adamantly stated he wants to do—after the company’s board of directors gave its approval.
Musk’s attorney Mike Ringler complained in a letter to Twitter’s board that his client had been looking for information about the frequency of “fake or spam” accounts on the social media site for almost two months.
BREAKING: Elon Musk says he is terminating his $44 billion Twitter deal https://t.co/X1qiGld4bM pic.twitter.com/6gTTyn6yFV
— Reuters (@Reuters) July 8, 2022
“Twitter failed to give this information or refused to do so. Twitter has at times ignored Mr. Musk’s demands, at other times rejected them for apparent unreasonable reasons, and at other times claimed to comply while providing Mr. Musk with inaccurate or partial information, according to the letter.
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Musk added that the data is essential to Twitter’s operations and financial health and that it is required to complete the deal. Bret Taylor, the chair of Twitter’s board, responded by tweeting that the board “plans to pursue legal action to enforce the merger agreement” and is “committed to finalizing the acquisition on the price and terms agreed upon” with Musk.
We are sure that the Delaware Court of Chancery will rule in our favor. Business conflicts between the numerous corporations, like Twitter, that are incorporated in Delaware are typically handled by the trial court there. The most of the controversy has taken place on Twitter, where Musk, who has more than 100 million followers, has complained that the social media site isn’t doing enough to promote free speech.
Twitter’s stock dropped 5% on Friday to $36.81, much below the $54.20 Musk had offered to pay. Tesla’s stock, meanwhile, increased by 2.5 percent to $752.29 per share. Wedbush analyst Dan Ives warned investors in a note to investors that “this is a nightmare scenario for Twitter and its board.” He anticipated a protracted legal battle by Twitter to either get the pact reinstated or receive a $1 billion breakup fee.
“Going after Twitter at a $44 billion price tag for Musk and never making much sense to the Street was always a head-scratcher. Now it finishes (for now) in a ‘Twilight Zone’ conclusion with Twitter’s board back against the wall and many on the Street scratching their heads over what is next.
In a conference with journalists and business executives on Thursday, Twitter attempted to provide more clarity on how it determines the number of spam accounts. Twitter said that it removes 1 million spam accounts per day and that each quarter, the spam accounts make up less than 5% of its active user base.
Twitter claimed it reviews “thousands of accounts” picked at random, using both public and private data to evaluate whether an account is legitimate, including IP addresses, phone numbers, geolocation, and how the account behaves when it is active, to determine how many accounts are malicious spam.
According to numerous stories at the time, Twitter reportedly gave Musk access to its “firehose” of raw data on hundreds of millions of daily tweets, though neither the business nor Musk verified this. One of the main justifications Musk provided for his interest in taking Twitter private was his conviction that he could add value to the company by eliminating its spam bots, the same issue he is now citing as justification for terminating the agreement.
Christopher Bouzy, the creator of the research company Bot Sentinel, which monitors phoney Twitter accounts used for harassment or disinformation, said, “This whole process has been strange.” “He was aware of the issue. It’s strange that he would try to wriggle out of the agreement by using trolls, bots, and fake identities.
However, according to Bouzy, the letter from Musk’s legal team makes some well-founded criticisms of Twitter’s lack of openness, including its apparent refusal to give Musk access to the same degree of internal information that it does for some of its more important clients.
Bouzy, who also thinks the number of bogus or spam Twitter accounts is bigger than what the business has recorded, said: “It simply appears as if they’re hiding something.” A third of Twitter’s talent acquisition staff was laid go, according to Musk’s attorney, and the company sacked its general manager of customers and leader of revenue products.
He claimed that the terms of the sale deal obliged Twitter to “seek and gain consent” before departing from its regular course of operations. The letter stated that Twitter had to “maintain substantially intact the material components of its current corporate organisation.”
Musk appears to start considering purchasing Twitter in late March. At that point, according to Twitter, he allegedly got in touch with the firm’s board members, including co-founder Jack Dorsey, and informed them that he was buying up shares and was considering either joining the board, taking Twitter private, or founding a rival company.
Then, on April 4, he disclosed in a regulatory filing that he had acquired a 9 percent stake in the company, valued at roughly $3 billion, making him the largest stakeholder. Twitter initially offered Musk a position on its board. Six days later, though, Agrawal tweeted that Musk would not, in fact, be joining the board. After that, his acquisition bid for the business rapidly came together.
Musk had agreed to purchase Twitter for $54.20 per share, adding the number “420” to his bid. To help pay for the purchase, he sold shares in Tesla valued approximately $8.5 billion. He then increased his commitments from investors by more than $7 billion, including influential figures from Silicon Valley like Oracle co-founder Larry Ellison.
Inside Twitter, confusion and a decline in morale followed Musk’s public criticism of one of the company’s senior attorneys who was engaged in content-moderation decisions.
Twitter executives stopped hiring, stopped discretionary spending, and removed two key managers as they got ready for the acquisition to go through. A member of the San Francisco company’s talent acquisition team was most recently among those let go.
