- Elon Musk officially terminates Twitter deal.
- Twitter board chair insists sale must go on.
- Board Chairman says company will use legal actions to force Musk to buy Twitter.
- If Musk legally establishes that he no longer wants to buy Twitter, he could pay Twitter $1billion penalty fee.
- Drama will dominate the next few tech space following this development.
- Musk Wants to terminate the deal over too many bot (Fake)accounts.
Enjoy the read:
The global tech space has taken up drama again this evening as Elon Musk, Tesla and SpaceX’s CEO, has declared to officially terminate his Twitter deal.
Musk says he is no longer interested in buying Twitter.
In a letter sent by a lawyer on his behalf to the the tech company’s chief legal officer, Musk said he wants to terminate his $44 billion deal to buy Twitter.
Twitter Says Deal Must Continue:
Meanwhile, Twitter’s board chairman, Bret Taylor, has said that the buy off deal must continue.
He said that Twitter is still committed to having Musk become its new owner on the agreed price.
The board chairman said Twitter will pursue legal actions to force Musk to buy the company.
What they are saying:
“We are confident we will prevail in the Delaware Court of Chancery,” Taylor wrote.
Meanwhile, following the letter by Musk to pull out of the Twitter deal, Twitter shares went down about 6% after hours on Friday.
Why Elon Musk Terminates Twitter Deal:
The billionaire said in a filling of Securities and Exchange Commission, that “Twitter has not complied with its contractual obligations.”
Musk spoke through his chief legal officer, Skadden Arps attorney Mike Ringler.
According to the officer, Twitter did not provide Musk with relevant business information he requested.
He said the terms of the contract between Musk and Twitter entails that the tech company ought to provide the billionaire with the necessary and needed information he wanted.
Twitter and Musk disagree over 5% bot accounts:
Ever since Musk and Twitter struck the deal, both parties have been as lodger-heads over alleged 5% bot accounts.
Twitter claims that only about 5% of its monetizable daily active users (mDAUs) are spam accounts.
However, Musk believes otherwise. He disagreed with the Twitter board over claim that only bout 5% spam accounts.
“Twitter has failed or refused to provide this information,” Ringler claimed.
Continuing, he said, “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
Also, Elon Musk, through his lawyer, accused Twitter of breaching the terms of merger agreement because it allegedly contains “materially inaccurate representations.”
However, Twitter on the other hand, said it is not possible to calculate spam accounts from solely public information.
The company also said that a team of experts conducts a review to reach the 5% figure.
“While this analysis remains ongoing, all indications suggest that several of Twitter’s public disclosures regarding its mDAUs are either false or materially misleading,” Ringer alleged.
“Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement,” Ringer added.
“In fact, he 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.”
He also claimed Twitter breached its obligations under the agreement to get Musk’s consent before changing its ordinary course of business, pointing to recent layoffs at the company.
While Musk is now officially seeking to walk away from the deal, this saga is likely far from over.
Under the terms of the agreement, Musk agreed to pay $1 billion if he backs out. But as Twitter’s board chairman indicated they would do, the company can seek to hold Musk to his original deal by suing him for walking away if they dispute that his reasoning should let him out of the contract.
Twitter has reason to seek to hold Musk to his original terms. The stock has fallen considerably since the board announced it had accepted his offer to buy the company at $54.20 per share. On the day of that announcement, the stock ended the trading day at $51.70 per share. Twitter shares sat at $36.81 as of Friday’s market close.
Musk is apparently paying attention to the stock price, too, according to the letter, “and is considering whether the company’s declining business prospects and financial outlook constitute a Company Material Adverse Effect giving Mr. Musk a separate and distinct basis for terminating the Merger Agreement.”