Elon Musk, the CEO of Tesla, announced on Friday that he was canceling his $44 billion bid to acquire Twitter because of social media business had broken numerous merger agreement clauses.
Twitter’s chairman, Bret Taylor, said on the microblogging platform that the board planned to sue to enforce the merger agreement.
He wrote that the Board is dedicated to completing the transaction under the terms and conditions set forth in the agreement with Mr. Musk.
Musk’s attorneys said in a document that the social media platform has ignored or refused to reply to several requests for information on phony or spam accounts on the site, which is essential to the operation of the company.
According to the filing, Twitter appears to have made false and deceptive statements upon which Elon Musk relied when signing the Merger Agreement, and is therefore in significant breach of several terms of that Agreement.
In a letter submitted to the Securities and Exchange Commission announcing the termination of the offer, Musk may additionally be subject to a $1 billion exit penalty, which he is attempting to avoid by accusing Twitter of a “breach of various provisions” of the deal.
According to Musk’s team, he has been looking for the information needed to “conduct an independent assessment of the incidence of false or spam accounts on Twitter’s network” for almost two months. Twitter “has either been unable or unwilling to share this information.”
Instead of a judge directing a transaction to be finalized, contested mergers and acquisitions that are brought before Delaware courts typically result in the corporations renegotiating agreements or the acquirer paying the target a settlement to withdraw. This is because the target companies are frequently eager to end the doubt around their future and move forward.
According to a person familiar with the situation, Twitter, meanwhile, is hoping that court procedures will begin in a few weeks and conclude in a few months.
After Musk purchased stock in the firm in early April, Twitter’s shares rose, protecting it from a severe stock market sell-off that battered rival social media companies.
However, after he decided to purchase Twitter on April 25, the price quickly started to decline as investors worried Musk might back out of the deal. After the bell on Friday, Twitter’s stock price fell to its lowest level since March.
The news opens a new chapter in the will-he-won’t-he saga that started when Musk agreed to purchase Twitter in April, but delayed the deal unless The social media platform could show that spam
bots make up less than 5% of its total user base.
On Friday, some workers appeared to be commenting on the separation by openly posting memes on Twitter, including images of a rollercoaster and a baby yelling into a phone.
Several employees have expressed doubt about Musk’s plans to relax content moderation because they are concerned about what the merger will imply for their jobs, salary, and ability to work remotely.
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