Elon Musk backs out of Twitter acquisition
Twitter's board of directors announces that it will take the entrepreneur to court to enforce the agreement that was reached.
He accused the social network of having violated its contractual obligations by providing in particular erroneous data on its number of users.
Elon Musk announced on Friday that he was terminating the agreement to buy Twitter for $44 billion and accused the social network of having violated its contractual obligations by notably providing incorrect or incomplete data. on the number of fake accounts.
The title Twitter, which had lost 4.85% in session on Wall Street after an article from the Washington Post indicating that takeover plan was in jeopardy, tumbled more than 6% in trades after markets closed.
The boss of Tesla had threatened to terminate the takeover agreement unless the social network proves that fake accounts represented less than 5% of users who see advertising on its platform, a figure confirmed by Twitter since the last weeks.
However, the multi-billionaire and his team believe that the social network is lying, and that this harms the performance of the company and, therefore, the valuation of Twitter.
Last month, Twitter granted Elon Musk access to a repository of raw data on hundreds of millions of daily tweets.
According to the world's richest man, the company provided incomplete or unusable data, and it appeared that it had counted in its user total suspended accounts of which it was aware therefore they were false.
Elon Musk's lawyers also cite recent layoffs of Twitter employees and hiring freezes as reasons.
For weeks, experts have debated whether Elon Musk was looking to withdraw his offer or renegotiate the acquisition price downwards.
By ending his engagement, the& #x27;businessman faces legal action.
In fact, Twitter chairman Bret Taylor said on Twitter that the social network is committed to completing the transaction at the price and terms agreed with Mr. Musk and plans to sue him to enforce the agreement.
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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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Both parties have pledged to pay severance compensation of up to $1 billion under certain circumstances.
This is a dire scenario for Twitter and its administrative committee, because the company will now have to face Musk in a long legal battle to save the transaction and/or recover at least a billion dollars, reacted the analyst Dan Ives.
< p class="e-p">As for her, analyst Carolina Milanesi believes that Elon Musk has compiled a list with as many reasons as possible to avoid having to pay the expected fine.
Even if the social network emerges weakened from the many adventures of recent months, the worst would be if Twitter forces the acquisition to take place […] They would end up with an owner who does not want of the company, and [who is] full of resentment, she thinks.
On April 25, Elon Musk seemed to have won his bet, despite attempts to Twitter to push it back. The entrepreneur had an agreement with the group's board of directors to buy the social network at a price of $54.20 per share.
Since then, the title of Twitter has lost more than a quarter of its value. Most stocks are having a tough year on the stock market: the Nasdaq index is down more than 26% since the start of 2022.
With information from Agence France-Presse, and Reuters