SpaceX CEO, Elon Musk has announced his decision to withdraw his $44 billion offer to buy Twitter, according to a letter sent by his lawyers on Friday.
He asserts that the deal made "false and deceptive" representations all throughout the process, constituting a "material breach." According to Musk's attorneys, Twitter has not provided important information regarding spam and bot accounts.
“For nearly two months, Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,’” Musk’s lawyers wrote. “Twitter has failed or refused to provide this information.”
It's unclear whether he will be able to withdraw because of the spam bot allegations alone. The contract said that in the event of a breach, the breaching party would be required to pay a $1 billion termination fee. Although it would be costly and could take months or more.
Bret Taylor, the chair of the Twitter board, responded to Musk's letter by tweeting that the firm will take legal action against Musk to ensure that the deal would go through at the price and terms originally agreed upon.
“We are confident we will prevail,” Taylor wrote.
The price of a share of Twitter dropped by 5% on Friday and another 6% after market close, reaching $34.60. Musk agreed to purchase the business at a share price of $54.20, which is more than 1.5 times greater.
This sum includes the number "420," which Musk has frequently used in his online troll tactics as a reference to marijuana.
The continuous turmoil started at the beginning of the year when Musk began covertly accumulating Twitter shares.
A further lawsuit claims that after surpassing a 5 per cent ownership holding in the company in March, he did not properly notify investors. However, he did finally go public in April, disclosing a 9.2 per cent ownership, before continuing to make more purchases.
Twitter's top executives initially made an effort to get along with the billionaire by granting him a seat on its board. Musk concurred. Then, at the last second, he broke his word.
The company then implemented a "poison pill," a corporate tactic designed to prevent an unfavourable investor from taking over a company. But Musk once more stunned the world when he said he wanted to buy the platform altogether.
Some were shocked to learn that Musk was apparently serious. He secured the necessary financing and, presumably without completing due diligence, ultimately signed a legally binding deal.
Only a few weeks later, the tech sector started to lose its stability, which caused Twitter's stock to collapse. Musk suddenly seemed to lose his cool, shouting out about the frequency of spam and bots on the website and deciding—retroactively—that the business needed to show it hadn't undervalued the number of bogus accounts on its platform.
Musk is now trying to pull out of the contract using that justification. Another matter entirely is whether a judge will accept it.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.— Bret Taylor (@btaylor) July 8, 2022
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