Elon Musk is about to withdraw from the $ 44 billion bid to buy Twitter for the microblogging platform
Tesla CEO and the wealthiest person in the world, Elon Musk is about to withdraw from the $ 44 billion bid to buy Twitter for the microblogging platform.
Musk said in a filing with the SEC that he wanted to close the deal because Twitter made a statement during the negotiations that “substantially violated the agreement and was” falsely misunderstood. ”
Meanwhile, the social media company said it would take legal action to implement the agreement. After Elon Musk decides to buy Twitter in April, Musk’s actions to cancel his deal show the latest twist in the long-running story.
Why Masks Get Out of Trading
Musk claims that Twitter was unable to provide the necessary information about the proliferation of fake and spam accounts on the platform.
This is the concern he first raised in May. At the time, he had said that the deal was “temporarily on hold” until he received the data from Twitter, which had asserted that spam and bot accounts make up less than 5% of all users.
In a submission to the Securities and Exchange Commission, Musk’s legal team said, “For nearly two months, Musk has the data and information needed to perform an independent assessment of counterfeiting or spam account epidemics on Twitter. Twitter has failed or refused to provide this information.
Twitter has ignored Mr Musk’s request, refused it for seemingly unreasonable reasons, or was incomplete or unusable by Mr Musk. We may also claim to refuse while providing information. “
Musk also said he was pulling out because Twitter fired senior executives and a third of its talent acquisition team, breaching Twitter`s obligation to “preserve substantially intact the material components of its current business organisation.”
While these are broadly the two main reasons that Musk has intimated the SEC for terminating the deal, several external factors could have also played a role in his decision.
First, technology stocks around the world have changed significantly since the transaction was announced. Twitter’s share price on the New York Stock Exchange closed at $ 36.81 on Friday but fell almost 29% to $ 51.70 when the company accepted Mask’s offer on April 25.
Tesla’s share price has fallen by more than 24% since the deal was announced. Second, there was also a question mark on how Musk would fund the $ 44 billion transactions. In May, Musk told the Securities and Exchange Commission that the transaction would raise $ 33.5 billion in shares from a previous $ 27.25 billion commitment. He also sold about $ 8.5 billion worth of Tesla shares and raised about $ 7 billion from investors, including Prince Al Waleed Bin Talal of Saudi Arabia.
However, he said he is still seeking additional funding from the SEC and is discussing the possibility of maintaining a stake in the company with Twitter shareholders, including former Twitter CEO Jack Dorsey. It is unclear if Musk was able to raise enough money to fund the transaction.
What will happen next?
Mask and Twitter may face a lengthy court battle as the social media platform reveals that it will take legal action to enforce the terms of the deal. “Twitter’s board of directors has promised to close the transaction at the price and terms agreed with Mr Musk and will take legal action to implement the merger agreement. I am confident that we will win the case in the Delaware Court of Equality. ” The original merger agreement also included a $1 billion share fee.
According to Reuters, the final controversial merger or acquisition in a court in Delaware is almost always a case where the parties renegotiate the transaction or the acquirer does not order the judge to close the transaction. It ends by paying the settlement money to the target company.
Many twists and turns in the mask and Twitter deal Musk began buying Twitter shares in January 2022, after which his stake in the company rose to more than 5% in March and 9.2% in April, making it the company’s largest single shareholder. rice field. On April 4, Twitter CEO Parag Agrawal announced that Musk would join Twitter’s board of directors, but just four days later, on April 9, Musk gave a social media company a board seat. He said he would accept taking a seat instead.
Proposal to keep the company private. On April 14, Musk proposed to buy Twitter for $ 44 billion. As a result, Twitter’s board of directors has adopted a “poison pill” strategy to thwart attempts at hostile takeovers of the company. On April 25, after Musk revealed details of its financial plan and stated that it had promised to raise $ 46.5 billion, the company would buy Twitter to get private gain weights for the original $ 44 billion. I accepted the proposal.
In the weeks that followed, Musk sold about $ 8.5 billion worth of Tesla shares and raised $ 7.1 billion to close deals with financial institutions such as Prince Alwarid Bintalal, Sequoia, Binance and a16z. Shortly thereafter, Agrawal announced that Twitter’s top executives Kayvon Beykpour and Bruce Falck are leaving the company. He also announced employment freezes and other austerity policies.
During his May 14 press conference, Musk mentioned that the Twitter deal was “temporarily on hold” due to the issue of fake and spam accounts on the platform. After billionaire entrepreneur Elon Musk announced he was terminating a deal to buy Twitter Inc, employees said they were disbelieving and exhausted by the news. However, Agrawal explained that fewer than 5% of users were spam or fake accounts. Yet Musk said that the deal “cannot move forward” without proof of fake accounts.
The Twitter CEO said the company violated several provisions of its $44 billion acquisition agreement in April, including failing to turn over suitable data on spam accounts. He said some executives and recruiters were let go. It is anticipated that the board will take legal action to enforce the agreement, according to Twitter’s chairman.
Several engineers, marketing leaders, and other staff immediately took to Twitter to post memes, including a baby screaming into a phone and a rollercoaster ride, in apparent commentary on Musk’s earlier courtship of Twitter.
Others joked that it was impossible to break their commitment. Employees have expressed widespread concern about Mask’s acquisition of Twitter as Mask prefers to reduce personnel and other costs, reduce content moderation, and limit remote work.
However, the rejection of Mask’s current bid means a 36% premium on the company’s stock, which could mean a big payday for employees and other shareholders. After months of constant headlines, Twitter workers told Reuters on Friday that the road ahead only made them more tired. “I don’t think it’s over,” said the employee, subject to anonymity. “End of season one – what a cliffhanger!” tweeted Amir Shevat, whose Twitter bio says he works on the company’s developer products.
Twitter user Jared Manfredi, who says he works on iOS products, wrote, “If only this weren’t the beginning of a lengthy court battle that will just lead to a lower purchase price and continue the circus for another indefinite period.”
A request for comment through private messaging did not yield an immediate response from Reuters, which could not independently verify the information in their profiles. Last month, Twitter said it would increase the number of users who saw ads by 13 million during the just-ended second quarter, the highest goal it has ever set. A second-quarter earnings announcement has not yet been made by Twitter.
Musk, who heads automaker Tesla and rocket company SpaceX, told Twitter employees in a video townhall later in the month that he wants the company to grow from 229 million users to 1 billion. In addition, he encouraged users to post things that they find “pretty outrageous.”
Musk, a prolific Twitter user, says owning a social media service can make it more fun and maintain it as an important public forum.
His lawyer said Twitter did so in a regulatory filing filed Friday.
edited and proofread by nikita sharma