Elon Musk has informed Twitter that he is canceling the buyout agreement for the social media platform. Musk originally planned to purchase Twitter for $54.20 per share in a $44 billion transaction. However, Tesla’s CEO is now withdrawing from the costly commitment due to “misleading representations,” claiming that Twitter misled him and his team about the platform’s bot problem (via NPR).
Since Musk’s initial Twitter acquisition plans became public, he has repeatedly stated on public platforms that fixing Twitter’s bot problem is one of his top priorities, along with preserving free speech because he is a “free speech absolutist” himself. In the weeks that followed, Musk repeatedly targeted Twitter, claiming that the company’s fake and spam account problems were far worse than he had been told.
He even claimed that he ran a random test and discovered that one-fifth of all Twitter accounts are spammy or fake. Musk also asked Twitter for “firehose” access to its data so that he could get a realistic picture of user activity, which was quickly granted after some hesitation, according to NPR. Musk’s skepticism has now reached an unsurprising conclusion, with the world’s richest man announcing that he will no longer proceed with his Twitter acquisition.
Twitter wants the deal, even in a court
Musk’s legal representative accuses Twitter of providing “incomplete or unusable information” and that “Twitter has not complied with its contractual obligations” in a regulatory filing submitted to the US SEC and addressed to Twitter’s legal head Vijaya Gadde. However, it appears that Twitter will not allow Musk to back out of the deal without taking the matter to court.
Bret Taylor, the chairperson of Twitter’s board of directors, tweeted that the company will take all necessary steps to ensure that the transaction is completed on the terms agreed upon by both parties. If that doesn’t happen, a legal battle is on the way. According to Taylor, the company “plans to pursue legal action to enforce the merger agreement.” It should be noted that the original agreement includes a $1 billion fine for the party who breaches the agreement.
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However, Musk’s withdrawal from the deal is not surprising. For months, experts have warned that his public attacks on the company and its executives were a ploy to undervalue the deal’s final terms or completely back out of it. It remains to be seen whether Musk’s arguments will prevail in the Delaware Court of Chancery, or whether Twitter will receive the $1 billion fees and be able to function without the volatile billionaire at the helm.