A dramatic legal battle looms after tech billionaire Elon Musk announced he was backing out of his $64 billion deal to buy Twitter.
A sordid legal battle is brewing after Elon Musk announced that he was terminating a deal to buy the social network Twitter, citing irreconcilable differences with the company over fake and spam accounts.
The richest man in the world has previously accused Twitter of “Resistance and suppression” of his attempts to access information about fake accountsstating that the deal could not proceed until the issue was resolved.
Mr. Musk claims that up to 20% of the 229 million Twitter users may be fake. The company itself claims that the real figure is about 5%.
“Mr. Musk is terminating the merger agreement because Twitter materially violates numerous provisions of the agreement, (and) appears to have made false and misleading statements that Mr. Musk relied on in entering into the merger agreement,” Tesla and SpaceX CEO Lawyers said wrote in a letter to Twitter.
Shares of Twitter fell 6 percent in extended trading on Friday as weeks of speculation that the deal was under threat continued to mount.
In response to Mr. Musk’s attempt to leave, Twitter chairman Bret Taylor signaled that the company would go to court to force him to complete the deal.
“Twitter’s board of directors is committed to closing the deal 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 win in the Delaware Court of Chancery.”
Meanwhile, an anonymous Twitter employee told NBC News that Musk’s decision seems like a win of sorts.
“I think we won. But it feels like this is the end of the movie, where the characters are bloodied and deceived, and behind them the explosion of Michael Bay, ”said the worker.
“We could have foreseen this to happen, but in the meantime, he fucking destroyed the company.”
New York Times reports that memo sent Twitter staff to refrain from commenting publicly or privately.
“Given that this is an ongoing legal matter, you should refrain from tweeting, idling, or making any comment about the merger agreement,” the company’s general counsel wrote.
Reason for leaving Mask
In their letter, addressed to Twitter General Counsel Vijay Gadda and published by the U.S. Securities and Exchange Commission, Musk’s lawyers argued that the company had violated its obligation to provide him with the requested information “for any reasonable business purpose related to the consumption of the transaction.”
Twitter failed to fulfill its contractual obligations. For almost two months, Musk sought data and information needed to “conduct 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,” wrote lawyer Mike Ringler.
Twitter was unable or refused to provide this information. At times, Twitter has ignored Mr. Musk’s requests, at other times it has denied them for reasons that seem unreasonable, and at other times it has claimed compliance by providing Mr. Musk with incomplete or unusable information.”
He said Musk had made “numerous additional requests” aimed at “filling in the gaps in the complete information provided by Twitter.”
In short, Twitter did not provide the information Mr. Musk requested for almost two months, despite his repeated detailed clarifications designed to make it easier for Twitter to identify, collect, and disclose the most important information requested.
“Because Twitter has been notified of the breach (of the merger agreement) since at least June 6, any correction period offered by Twitter under the agreement has expired. Accordingly, Mr. Musk hereby exercises (his) right to terminate the agreement and withdraw from the deal it contemplates.”
Mr. Musk, who has a net worth of about $380 billion, announced his plan to buy Twitter in April, offering to purchase all outstanding shares of common stock at a price of $54.20 per share.
Earlier this month, he acquired a 9.2% stake in the social media company, making him the largest individual shareholder.
Twitter chief executive Parag Agrawal later revealed that Mr Musk turned down an offer to join the company’s board of directors – a move that would have prevented him from acquiring more than a 14.9% stake in the company – sparking the first wave of takeover speculation.
“I invested in Twitter because I believe in its potential to become a platform for free speech around the world, and I believe free speech is a societal imperative for a functioning democracy,” Musk said in a letter to Twitter’s board regarding his purchase offer. .
“However, after investing my funds, I now understand that the company will neither prosper nor serve this public imperative in its current form. Twitter needs to be turned into a private company.
“As a result, I am offering to buy 100% of Twitter shares for $54.20 per share in cash, at a 54% premium over the day before I started investing in Twitter, and at a 38% premium over the day prior to my investment was announced publicly.
“My offer is my best and last offer, and if it is not accepted, I will have to reconsider my position as a shareholder. Twitter has exceptional potential. I will unlock it.”
Twitter’s board agreed to the deal after Musk unveiled a funding package that included $21 billion of his personal fortune. But on May 13, the billionaire announced that the deal was on hold, citing a desire for more information about spam accounts.
At the time, Mr. Agrawal posted a thread on social media explaining the company’s position on the matter. Mr Musk responded with poop emoji.
Mr. Musk, who has become one of Twitter’s most influential users with his posts regularly causing stock and cryptocurrency market spikes, has come out as a vocal critic of the platform’s business practices and, in particular, its content moderation policies.
After he received a large stake, he poked fun at Twitter and its employees with a series of provocative posts that reportedly caused a lot of anxiety within the company and prompted executives to give employees a planned “day off”.
In one, he created a poll asking if Twitter’s headquarters in San Francisco should be turned into “a homeless shelter because no one shows up anyway.”
More than 91% of respondents, or 1.9 million people, answered yes.
He also shared with approval a video of legendary activist investor Carl Icahn telling the story of how he “fired 12 floors of people” after taking over the company early in his career.
Originally published as Elon Musk closes deal to buy Twitter after fake account dispute