Elon Musk has announced that he is backing out of his tumultuous $44 billion bid to buy Twitter, leaving the deal on the brink of collapse. Tesla’s CEO sent a letter to Twitter’s board on Friday saying he was ending the acquisition.
But Twitter does not accept Musk’s statement. Twitter Chairman Bret Taylor tweeted in response that the board is “committed to completing the transaction at the price and terms agreed to with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident that we will prevail in the Delaware Court of Chancery.
Twitter could have claimed a $1 billion severance fee that Musk agreed to pay under these circumstances. Instead, he appears set to fight to complete the deal, which the company’s board has approved and CEO Parag Agrawal has insisted he wants to make it happen.
The eventual outcome of the deal is just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms. Much of the drama unfolded on Twitter, with Musk – who has more than 100 million followers – lamenting that the company hasn’t lived up to its potential as a platform for freedom. expression.
On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5% to $752.29.
Musk’s attorney, Mike Ringler, wrote in the letter to Twitter dated Friday that for nearly two months Musk researched data to judge the prevalence of “fake or spam” accounts on the media platform. social.
“Twitter failed or refused to provide this information. Sometimes Twitter ignored Mr. Musk’s requests, sometimes it rejected them for reasons that seem unwarranted, and sometimes it pretended to comply while giving Mr. Musk incomplete or unusable information,” the letter reads. He also said the information is fundamental to Twitter’s business and financial performance, and is necessary to complete the merger agreement.
“This is a doomsday scenario for Twitter and its board,” Wedbush analyst Dan Ives wrote in a note to investors on Friday. He predicted a lengthy legal battle by Twitter to reinstate the deal or get a $1 billion breach fee specified in the contract. “Since the beginning it’s always been a headache to sue Twitter at a $44 billion price tag for Musk and never made much sense on the street, now it’s ending (for now) in a twilight zone ending with Twitter’s board against the wall and many on the street scratching their heads around what’s next.
On Thursday, Twitter sought to shed some light on how it counts spam accounts during a briefing with journalists and business executives. Twitter said it deletes 1 million spam accounts every day. spam accounts represent well under 5% of its active user base each quarter. To calculate how many accounts are malicious spam, Twitter said it examines “thousands of accounts” randomly sampled, using both public and private data such as IP addresses, phone numbers, geolocation and account behavior when active, to determine if an account is real.
Last month, Twitter offered Musk access to its “firehose” of raw data on hundreds of millions of daily tweets, according to multiple reports at the time, although neither the company nor Musk confirmed this. Private data, which is not publicly available and therefore not in the data “firehose” given to Musk, includes IP addresses, phone numbers and location. Twitter said this private data helps avoid misidentifying real accounts as spam.
Ringler also alleged that Twitter broke the deal by firing its chief product officer and chief consumer officer, and announcing the layoff of a third of its talent acquisition team. The sale agreement, he wrote, required Twitter to “seek and obtain consent” if it deviated from the normal course of business. Twitter was required to “preserve the material components of its current business organization substantially intact,” the letter states.
Musk’s flirtation with buying Twitter appears to have begun in late March. That’s when Twitter said it contacted its board members – including co-founder Jack Dorsey – and told them it was buying stock in the company and wanted join the board, privatize Twitter or launch a competitor. Then, on April 4, he disclosed in a regulatory filing that he had become the company’s largest shareholder after acquiring a 9% stake worth about $3 billion.
At first, Twitter offered Musk a seat on its board. But six days later, Agrawal tweeted that Musk would ultimately not join the board. His offer to buy the company materialized quickly thereafter.
Musk had agreed to buy Twitter for $54.20 per share, inserting a “420” marijuana reference into his offer price. He sold about $8.5 billion worth of Tesla stock to help fund the purchase, then bolstered his commitments by more than $7 billion to a diverse group of investors, including heavyweights. Silicon Valley heavyweights like Oracle co-founder Larry Ellison.
Inside Twitter, Musk’s offer was met with confusion and low morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content moderation decisions.
As Twitter executives prepared to move the deal forward, the company instituted a hiring freeze, halted discretionary spending and laid off two senior executives. The San Francisco company also laid off staff, most recently part of its talent acquisition team.
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