Elon Musk announced that he was withdrawing his $44 billion bid to acquire Twitter, alleging a “material violation” of the contract due to the company’s failure to disclose sufficient details regarding the number of fictitious accounts. Elon Musk claimed that the data is essential to Twitter’s operations and financial health and is required to complete the deal.
Mike Ringler, Musk’s attorney, complained that his client had spent over two months looking for information to assess the incidence of “false or spam” accounts on the social media site. Twitter appears to have made false and deceptive assurances upon which Mr. Musk appeared to have relied on entering into the Merger Agreement, according to a letter submitted by Elon Musk’s attorneys to Twitter’s board.
Twitter Declares Legal War Against Elon Musk
Bret Taylor, the board chair for Twitter, stated in response that the board is committed to completing the transaction on the price and terms agreed upon with Musk and they plan to seek legal action to enforce the merger agreement. The board is confident they will win in the Delaware Court of Chancery.
Elon Musk-Twitter Deal: Behind the story
Elon Musk, who has more than 100 million followers, lamented that the firm was not living up to its potential as a platform for free speech during most of the controversy around the sale.In a press conference on Thursday, Twitter clarified the mechanism of counting fake or spam accounts. Twitter claimed to delete 1 million spam accounts daily. The accounts make up much less than 5% of the total number of active users each quarter.Twitter claims it reviews “thousands of accounts” picked at random, using both public and private data to verify whether an account is legitimate.Based on numerous reports, Twitter reportedly gave Elon Musk access to its “fire hose” of raw data last month, though neither the business nor Musk acknowledged it.The fact that Musk thought he could add value to the company by eliminating its spam bots—the exact issue he’s now citing as a cause to stop the deal—was one of the main justifications he provided for his interest in taking Twitter private.It is particularly alarming that Twitter employees, who were already wary of Musk’s views on staff reductions, have publicly made jokes about the agreement and said that it would be impossible for them to breach their own personal commitments.
Ever since the news of bogus accounts broke Tech stocks kept dropping steadily. As Mr. Musk made his all-cash offer to acquire Twitter at $54.20 per share publicly on April 14, on the other hand, the tech-heavy Nasdaq Composite Index has fallen 15%.
Hence as of Friday’s end, they were trading at $36.81 per share, and Twitter shares had decreased by almost 20%.