Elon Musk will no longer be buying Twitter after all. Following weeks of back-and-forths between the billionaire and Twitter’s management, it’s now official that the deal is dead.
Musk’s lawyer wrote to Twitter informing the Board that his client is no longer interested in the $44 billion bid to buy the social media company.
In a swift reaction, Twitter’s Board Chair, Bret Taylor, urged Musk to follow through with the deal to buy Twitter or face legal action.
But what went wrong?
Why Elon Musk is No Longer Keen on Buying Twitter
After the announcement, several users threatened to leave Twitter if it is sold to Elon Musk, but that’s not why he’s backing out.
According to an SEC filing dated July 8, 2022, Musk’s lawyer accused Twitter of breach of the agreement. In his words:
Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect.
He also stated that Musk and his financial advisors at Morgan Stanley have been requesting critical information from Twitter since May 9, 2022, to no avail.
This information, according to him, was needed to help his client make an informed decision about the proposed deal. This includes information about Twitter’s actual mDAU (monetizable daily active usage/users) and the number of fake or spam accounts on its platform.
He also stated that follow-up letters were sent to Twitter on the 25th and 29th of May 2022. He further stated that Musk sent three more follow-up letters requesting the same information on June 6th, June 17th, and June 29th, all in 2022.
He accused Twitter of either failing to respond or responding with insufficient and unusable information.
Twitter’s Response to Musk
On its part, Twitter Board chair Bret Taylor has reassured Elon Musk, Twitter’s biggest shareholder, that Twitter is committed to seeing the deal through.
He stated they are committed to closing the deal on the price and terms agreed with Mr. Musk.
He also stated that they might consider legal action should Mr. Musk fail to reconsider and follow through with the deal.
Will Elon Musk Yield?
According to the Merger Agreement, Musk will have to pay Twitter $1 billion should he renege and walk away from the deal. However, we cannot tell for sure if Elon Musk will accept to pay the fine.
It appears as though he is trying to blame Twitter for not going through with the deal. If he succeeds, he may walk away freely, and Twitter would have to lick its wounds.
Elon Musk is no stranger to controversy, but it’ll be interesting to see how this may affect his relationship with the social media company where he holds majority shares.
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