Elon Musk Is Taking Steps to Cancel the $44 Billion Deal to Buy Twitter!

Elon Musk Is Taking Steps to Cancel the $44 Billion Deal to Buy Twitter!

The latest twist in a whirlwind process in which the billionaire Tesla CEO became the company’s largest shareholder, turned down a board seat, agreed to buy the social media platform, and then started raising doubts about going through with the deal was Elon Musk’s decision to terminate the $44 billion deal to acquire Twitter on Friday afternoon. There’s a good chance that the next chapter of this tale will take place in court.

Twitter (TWTR) is “in significant breach of many articles” of the original agreement, according to an attorney for Musk, who wrote the letter to Twitter’s top council on Friday evening, according to a regulatory filing.

For weeks, Tesla CEO Elon Musk has expressed his belief that Twitter has a much larger number of bots and spam accounts than the company has officially stated. It’s possible that he’s trying to find a way out of the arrangement because Twitter shares and the overall tech sector have fallen recently, analysts believe. Since he agreed to the acquisition, Tesla (TSLA) stock, which Musk was expected to rely on in part to finance the transaction, has fallen dramatically.

Tweeting Friday afternoon, Bret Taylor, Twitter’s board chair, said the business was “committed to finalizing the acquisition on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement.” In the Delaware Court of Chancery, “We are certain that we will succeed” Immediately following the news, after-hours trading on Friday for Twitter plunged over 6%, after closing the day down 5%. After-hours trading saw Tesla stock rise by more than 1%.

May’s “on-hold” announcement by Tesla CEO Elon Musk was in response to the volume of spam and fraudulent accounts on the network, which he had previously stated was the primary reason for his acquisition of Twitter. This past month, he threatened to walk away from the arrangement because of Twitter’s alleged failure to provide data that he claims is necessary for him to assess the extent to which the network is infested with spam and phony accounts. As a result, Twitter has agreed to provide its “firehose” of tweets for the purpose of auditing.

According to Tesla CEO Elon Musk’s legal team, in a letter received on Friday, Twitter has “not cooperated,” and “appears to have made false and deceptive assurances on which Mr. Musk relied” when he agreed to the agreement.

Elon Musk Is Taking Steps to Cancel the $44 Billion Deal to Buy Twitter!

According to Musk’s Friday letter, he has been looking for data and information for nearly two months in order to “conduct an impartial assessment of the incidence of false or spam accounts on Twitter’s network.” In order to complete the transactions contemplated by the Merger Agreement, this information is critical to Twitter’s business and financial performance.

It goes on: “This information has not been provided by Twitter. On more than one occasion, Twitter has refused to comply with Elon Musk’s requests, either outright or for a variety of reasons that do not appear to be valid.”

Twitter has frequently stated that it has worked with Musk to conclude the sale on the conditions that were originally agreed upon and that it has done so cooperatively.

A Twitter share price of 36 cents is considerably below Musk’s offer of $54.20 per share, indicating investor uncertainty about the sale going through at the agreed-upon price. This is down roughly 30% from the day Musk and Twitter announced their acquisition. Analysts speculate that the deal’s diminishing worth is a factor in Musk’s decision to walk away from it.

After That, What Could Possibly Happen?

Tobias, a law professor at the University of Richmond, Musk’s accusation that Twitter materially breached the merger agreement looks to be an attempt to get him off the hook for the $1 billion breakup fee stipulated in the deal conditions.

When a billion-dollar breakup fee is involved and you’re the one trying to acquire the company, Tobias explained, “it is enforced against you unless there is some kind of material breach or some kind of reason that can be offered up that persuades a court that Twitter, for example, is not making good on the deal.” Tobias added:

“The sample set used and calculations made” by Twitter in order to ascertain that spam and fraudulent accounts make up less than 5% of Twitter’s monetizable daily user base, according to Musk’s lawyer in Friday’s letter, were not provided to him, the letter stated. There have been claims that Twitter counts bots by using both public and private information, such as Internet service provider (ISP) numbers and location data, from its users. Though a legally binding agreement was signed, Musk is said to have “negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction,” in Friday’s letter.

Elon Musk Is Taking Steps to Cancel the $44 Billion Deal to Buy Twitter!

Brian Quinn, a law professor at Boston College, expects Twitter will ask the court for two things in its lawsuit against Tesla CEO Elon Musk. Twitter is anticipated to seek a legal order ordering Musk to finish the acquisition and a declaration that it has not breached its contract with Musk, he said.

To determine whether Musk’s demands for additional disclosures are fair and necessary for the completion of the merger, the court will likely analyze the information Twitter has already disclosed and whether Musk’s requests for future disclosures are justified.

Although legal proceedings may be ongoing, Quinn believes the parties will continue to negotiate a new price for the property. He cited the recent purchase between luxury labels Luis Vuitton and Tiffany, which went to court but was finally finalized at a cheaper price, as an example of this type of settlement in merger disputes.

Quinn said that Musk’s contention that he needs additional knowledge is a “difficult argument to make.” Judges in the state of Delaware are well-versed in how these transactions work and what is considered regular.

Related Article:

The Star of Virgin River Hints at A Role Outside of The Netflix Show!

Amber Heard Alleges the Jury in The Johnny Depp Defamation Trial Was Wrong and Requests a Mistrial!

Better Call Saul Finally Makes an Appearance in The Trailer Saul’s!

Shawn Mendes Cancels Upcoming Performances to Focus on His Mental Well-Being!

Backstreet Boys ‘i Want It that Way’ Performance Drake Joins Backstreet Boys on Stage!