Elon Musk announced on Friday that he will withdraw his tumultuous $44 billion bid for Twitter after the company failed to provide sufficient information about the number of fake accounts. Twitter immediately responded, stating that it would sue Tesla CEO to enforce the agreement.
The acquisition’s likely unravelling was just the latest twist in a saga involving the world’s richest man and one of the most influential social media platforms, and it may foreshadow a titanic legal battle ahead.
Twitter could have demanded a $1 billion breakup fee, which Musk agreed to pay under these conditions. Instead, it appears to be preparing to fight to complete the acquisition, which the company’s board has approved and CEO Parag Agrawal has stated he wants to complete.
Musk’s lawyer, Mike Ringler, complained to Twitter’s board that his client had been seeking data for nearly two months to assess the prevalence of “fake or spam” accounts on the social media platform.
Twitter has “at times ignored Mr. Musk’s requests, at times rejected them for reasons that appear to be unjustified, and at times claimed to comply while providing Mr. Musk with “incomplete or unusable information.” according to the letter. Musk also stated that the information is critical to Twitter’s business and financial performance and is required to complete the merger.
In response, Twitter’s board chair, Bret Taylor, tweeted that the company is “committed to closing the transaction on the price and terms agreed upon” with Musk and that the company is “committed to closing the transaction on the price and terms agreed upon.” plans to pursue legal action to enforce the merger agreement,” and “we are confident that we will be successful in the Delaware Court of Chancery hears business disputes involving the many corporations that are incorporated there, including Twitter.
Much of the drama surrounding the transaction has taken place on Twitter, with Musk — who has over 100 million followers — lamenting that the company was failing to live up to its potential as a free speech platform
Twitter shares fell 5% to $36.81 on Friday, well below Musk’s agreed-upon price of $54.20. Meanwhile, Tesla’s stock increased 2.5 percent to $752.29. After the market closed and Musk’s letter was published, Twitter’s stock fell, while Tesla’s stock rose.
“This is a disaster scenario for Twitter and its board,” wrote Wedbush analyst Dan Ives in an investor note. He predicted a protracted legal battle by Twitter to either restore the deal or collect the $1 billion breakup fee.
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