Elon Musk pulls out of the acquisition of the Twitter contract, and the business claims it will sue Tesla CEO to uphold the $44 billion agreement.
The richest man in the world and one of the biggest social networks in the world seem destined for formal problems. According to a letter his lawyer wrote to Twitter on Friday, Elon Musk is trying to sever his $44 billion deal to purchase Twitter and is blaming the business for hiding information about the number of spam and bogus accounts it has.
To learn more about the many aspects of Elon Musk’s decision to end the Twitter partnership, read the whole article.
Overview for the S.F. firm, Elon Musk pulling out of the Twitter transaction may be a “disaster scenario.”
Twitter, according to Musk, breached the agreement by giving “incomplete information” and making “false and misleading promises.”
According to Chairman Bret Taylor’s message on Twitter, the San Francisco-based Twitter wants to file a lawsuit to finalise the purchase.
The Twitter Board is dedicated to completing the deal at the price and conditions negotiated with Mr Musk, and it intends to take legal action to enforce the merger agreement. The co-CEO of Salesforce and Taylor stated, “We are sure we will win in the Delaware Court of Chancery.
If Musk pulls out of the agreement, a $1 billion penalty is included. Twitter reaffirmed Taylor’s remark when contacted for comment.
On Friday, market closing, Twitter shares were down 5% at $36.81, roughly 33% behind Musk’s offer of $54.20 per share. In after-hours trading, they decreased by another 5% to about $34.94 per share. In May, the company implemented a hiring freeze and let go of key leaders amid a larger tech slowdown. This week, the business announced more layoffs in its talent acquisition department.
The company’s “declining commercial prospects and financial outlook,” according to Musk’s letter from Friday, were factors in the deal’s cancellation.
The wealthy businessman’s decision to back out of the purchase will result in an “elongated court battle,” say analysts Dan Ives and John Katsingris of Wedbush Securities, and is “a catastrophe scenario for Twitter.” On Monday, they forecast, that the stock will drop even further, reaching $25 to $30, or approximately half of Musk’s original purchase price.
They stated that Musk’s decision to buy Twitter for $44 billion was “always a head-scratcher” and “never made much sense to (Wall) Street”
For the time being, Twitter’s CEO Parag Agrawal will be in charge of the company’s 1355 Market St. headquarters in San Francisco. In an April poll on Twitter with the title “Convert Twitter SF HQ to Homeless Shelter because No One Shows Up Anyway,” Musk comes to be critical of the company’s policy of allowing employees to work remotely indefinitely.
Musk’s office staff at his other businesses, Tesla and SpaceX, worked in the office full-time, which sparked rumours that he may eliminate Twitter’s remote-friendly work regulations after completing the acquisition. Requiring employees to return to the office would increase the local economy in Mid-Market.
According to a regulatory filing made in April, Musk started accumulating enough shares in March to reach a 9 per cent ownership stake. Less than a week after receiving the offer, he refused the board seat. His acquisition proposal was soon supported by some of the biggest institutions in the world, including Morgan Stanley, Barclays, and Bank of America.
$1 billion from billionaire Larry Ellison, co-founder of Oracle and a member of the Tesla board, and top venture capital companies Sequoia Capital and Andreessen Horowitz also contributed $1.2 billion for equity.
The letter was delivered on Friday to Twitter’s chief legal officer, Vijaya Gadde, by Musk’s attorney, Mike Ringler of Skadden, Arps, Slate, Meagher & Flom LLP. Musk has publicly attacked Gadde for Twitter’s harassment and content moderation policies, which is known as censorship. Just two days following the purchase agreement, Musk tweeted a meme that implied “left-wing bias” from Gadde.
This sparked a barrage of online harassment against Gadde from Musk’s then-86 million followers. Former President Donald Trump was banned from Twitter following the uprising on January 6, and Elon Musk has earlier promised to lift the restriction.
Musk has discussed the”free speech absolutist,” and Twitter censorship opponents, and conservative activists, applauded his impending acquisition because they thought it would allow for unrestricted posting. People who support Twitter’s restrictions on hate speech, harassment, and false information, including Twitter workers, are leery of the deal’s potential effects.
The CEO of Twitter, Agrawal, wrote in April that he had taken the position to “change Twitter for the better, course-correct where we need to, and strengthen the service” without mentioning Musk by name. I’m proud of our employees because they keep working despite the distractions with urgency and attention.
Three weeks later, Agrawal published a piece on the business’ spam practices, which are now at the centre of Musk’s decision to abandon the acquisition. Musk replied by sending him a face emoji on Twitter.
The most recent drama involving the world’s richest man and a major social media site involved a transaction that will certainly fail, and it may be the beginning of a protracted legal battle.
Musk has agreed to pay Twitter a $1 billion breakup fee under these circumstances. The acquisition, which the company’s directors have approved and which CEO Parag Agrawal has strongly declared he wants to implement, appears to be its top priority, and it looks willing to go into substantial measures to make it happen.
In a letter to Musk’s lawyer, Mike Ringler said that his client had spent over two months hunting for information concerning the prevalence of “false or spam” accounts on the social media platform.
“Twitter either omitted to provide this information. According to the letter, Twitter has disregarded Mr Musk’s demands, rejected them for ostensibly unjustifiable reasons, and purported to comply while giving Mr Musk incomplete information.
What does Elon Musk have to say about the termination of the Twitter deal?
Musk added that the data is important to Twitter’s operations and financial health and is required to complete the deal.
Twitter’s board Bret Taylor responded by tweeting that the board is “committed to finalising the purchase on the price and terms agreed upon” with Musk and that the board “plans to seek legal action to enforce the merger agreement.”
The Delaware Court of Chancery will undoubtedly decide in our favour, we are confident.
The controversy around the transaction largely took place on Twitter, where Musk, who has more than 100 million followers, bemoaned the fact that the company wasn’t living up to its potential as a business.
Twitter shares status
Twitter’s stock fell 5% on Friday to $36.81, a discount from the $54.20 Musk agreed to pay. Meanwhile, the price of a share of Tesla shares rose by 2.5 per cent to $752.29 per share.
After the market closed and Musk’s letter became public, Twitter’s price continued to decline while Tesla’s stock rose.
On Thursday, July 7, Twitter attempted to give more details about how it determines which accounts are spam during a meeting with journalists and executives. Twitter claims that 1 million spam accounts are purged every day.
“This whole process has been odd,” said Christopher Bouzy, the founder of the research firm Bot Sentinel, which keeps track of phoney it is used for harassment or misinformation. He was conscious of the problem. Strangely, he would employ trolls, bots, and false identities to try to get out of the deal.
Bouzy claims that the letter from Musk’s legal team does, make some valid critiques of Twitter’s lack of transparency, including its apparent refusal to grant Musk access to the same level of internal information that it does for some of its more significant clients.
Bouzy thinks the number of bogus or spam Twitter accounts is bigger than what the business has recorded, said: “It simply appears as if they’re hiding something.”
What did Elon Musk’s attorney say?
According to several stories at the time, Twitter reportedly gave Musk access to its “fire hose” of raw data on hundreds of millions of daily messages last month, though neither the business nor Musk verified it.
The belief that he could add value to the firm by getting rid of its spam bots was one of the key explanations which show his interest in taking Twitter private; this is the same problem he is now expressing as justification for ending the things.
Additionally, Musk’s attorney describes that Twitter violated the agreement when it let go of two top managers and reduced the size of its talent acquisition team by one-third.
Musk tends to start daydreaming. According to him, Twitter must “seek and acquire authorization” in accordance with the terms of the selling agreement before departing from its regular course of business. According to the letter, Twitter was demonstrated to “maintain largely intact the material components of it.”
Twitter was bought in late March. He then allegedly contacted the company’s board of directors, including co-founder Jack Dorsey, and informed them that he was purchasing shares and was thinking about either joining the board, taking Twitter private, or starting a competing business.
Then, on April 4, he disclosed in a regulatory filing that he had acquired a 9 per cent stake in the company, valued at roughly $3 billion, making him the largest stakeholder.
Twitter offered Musk a seat on its board. However, Agrawal tweeted six days later that Musk will not be joining the board. After that, his proposal to buy the company came together quickly.
When Musk decided to purchase Twitter for $54.20 per share, he added a marijuana allusion to his pricing. He sold shares in Tesla for about $8.5 billion to help pay for the transaction. Later, he raised his investment commitments from important Silicon Valley players including Oracle co-founder Larry Ellison by more than $7 billion.
On Twitter, confusion and a decline in morale followed Musk’s public criticism of one of the company’s senior attorneys engaged in content-moderation decisions.
The opposition to the takeover from the beginning, like organisations that support women, minorities, and LGBTQ individuals, applauded the announcement on Friday.
Contrary to what Musk may claim, Twitter bots or spam accounts are not to blame for the cancellation of this contract. According to Angelo Carusone, chairman of Media Matters, a left-leaning nonprofit watchdog organisation that had been sceptical of Musk’s bid for Twitter, “Elon Musk’s erratic conduct, support of radicals, and poor business judgments are to blame for this transaction collapsing.”
Musk, according to the author, “made it clear that he would weaken Twitter’s community standards and safety regulations, turning the platform into a fever swamp of dangerous conspiracy theories, partisan chicanery, and white supremacist radicalization.”
The Twitter staff prepares for more “Circus” following Elon Musk’s withdrawal from the deal.
Employees of Twitter Inc. expressed shock and tiredness on Friday after billionaire businessman Elon Musk announced he was cancelling a deal to purchase the social media company, potentially setting off months of legal wrangling.
Mr Musk said that Twitter broke several clauses in the $44 billion merger agreement, including failing to provide enough information on spam accounts and firing some executives and recruiters. The chairman of Twitter announced that the board intended to file a lawsuit to enforce the agreement.
In an apparent criticism of the most recent step in Musk’s courtship of Twitter since January, engineers, marketing executives, and other firm employees swiftly flocked to Twitter to share memes in public. These memes included images of a rollercoaster and a baby yelling into a phone. Others made jokes about how they couldn’t breach their promises.
However, Musk’s refusal of the offer still represents a 36% premium for the company’s shares and might result in a sizable payout for both staff members and other shareholders.
After months of relentless headlines, a Twitter staffer told Reuters on Friday that they were becoming bored of the journey ahead.
The employee, who requested anonymity, stated, “I just don’t think it’s actually over.”
Amir Shevat, who claims on his Twitter account to work on the business’ developer products, posted on the platform shortly after finding out about Musk’s dismissal. What a suspenseful season-opening episode.
“If only this wasn’t the start of a long-drawn-out legal battle that will just wind up lowering the purchase price and prolonging the circus for another undetermined amount of time,” said Jared Manfredi, who according to his profile works on iOS products on Twitter.
They did not immediately react to demands for comment sent through private messages, and Reuters was unable to verify the facts in their profiles independently.
The previous month, Twitter informed its workforce that it was on track to meet its highest-ever target of 13 million people viewing adverts during the recently ended second quarter. Twitter hasn’t yet made available the results of its second quarter.
Musk, the CEO of the electric vehicle manufacturer Tesla and the aerospace firm SpaceX, said in a video town hall with Twitter personnel that he aims to increase the service’s 229 million users to at least 1 billion users. He noted that users should be free to upload “pretty wild stuff.”
Musk, a frequent Twitter user, has said that if he owned a social media platform, he could make it more enjoyable while still keeping it as an important public forum.
edited and proofread by nikita sharma