Elon Musk Tells Twitter He Is ‘Terminating’ $44Bn Acquisition
No surprise? Elon Musk announces ending of his $44bn (£36bn) bid to buy Twitter, alleging multiple breaches of legal agreement
The long-running saga of Elon Musk and his $44bn (£36bn) acquisition of Twitter has taken a predictable turn.
On Friday it was reported that the takeover of Twitter by Elon Musk was in “serious jeopardy”, with the deal in peril due to an ongoing dispute between Musk and Twitter’s management, over the number of fake accounts and bots on the platform.
Shortly after that, Elon Musk announced he was pulling out of the acquisition because of multiple breaches of the agreement, but Twitter’s board of directors have vowed to pursue legal action to enforce the deal.
Musk announcement
Elon Musk announced he was withdrawing from his $44 billion offer to buy the platform, in a letter filed with Musk’s least favourite federal agency, namely the US Securities and Exchange Commission (SEC).
“We refer to (i) the Agreement and Plan of Merger by and among X Holdings I, Inc., X Holdings II, Inc. and Twitter, Inc. dated as of April 25, 2022 (the “Merger Agreement”) and (ii) our letter to you dated as of June 6, 2022 (the “June 6 Letter”),” the letter states.
“As further described below, 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 (as that term is defined in the Merger Agreement),” the letter states.
Musk’s side alleged that “Twitter has not complied with its contractual obligations. For nearly two months, Mr. Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform’” they wrote.
“Twitter has failed or refused to provide this information,” the letter alleges. “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
The original acquisition agreement between the two parties includes a $1bn (£830m) break-up fee.
And Twitter has strongly indicated there will be a legal fight to force Elon Musk to pay that break-up fee.
Legal, financial implications
In the agreement he signed, Musk can only back out if something major happens to Twitter’s business.
It remains to be seen whether Twitter’s bot issue may be enough of a justification. But Musk’s team clearly believe they have a legal argument.
Last month Musk’s lawyers sent a letter to Twitter warning that a refusal to co-operate over the spam account issue represented a “material breach” of the agreement.
Twitter’s board responded and warned Musk it will ‘enforce’ the takeover deal.
Yet the takeover has taken its toll on Twitter itself, with executive resignations, hiring freezes, staff unrest, and cost cutting exercises.
Twitter reportedly let go around 30 percent of its talent acquisition team (less than 100 staff) last week.
