Elon Musk ends Twitter takeover deal

In a letter published by the American stock market policeman, the lawyers of the boss of Tesla and SpaceX ensure that Twitter has not respected its commitments. The social network immediately announced legal action to “enforce the agreement”.

Elon Musk, the boss of Tesla and SpaceX, indicated to Twitter Friday July 8 that he was ending the agreement reached with the board of directors to buy the social network because of information “false and misleading” on the business.

In a letter published by the American stock market policeman, his lawyers assure that Twitter did not respect its commitments made in the agreement, by not giving all the information requested on the number of inauthentic accounts and spam. Twitter has repeatedly said in recent weeks that the number of fake accounts on its platform is less than 5%. The multi-billionaire and his team believe that the network is lying, and that this affects the viability of his business, and therefore the value of the company.

For weeks, experts have debated whether Elon Musk was looking to withdraw his offer or renegotiate the price lower. By ending his commitment to buy Twitter, the businessman exposes himself to substantial legal proceedings. Both parties have pledged to pay severance pay of up to $1 billion in certain circumstances. The president of Twitter immediately claimed that the company was going to take legal action for “enforce the agreement” redemption. “The Twitter board is committed to completing the transaction at the price and terms agreed with Mr. Musk”assured in a tweet Bret Taylor, specifying that they were “confident” in their chance to prevail in court.

“This is a dire scenario for Twitter and its board, as the company will now have to face Musk in a lengthy court battle to salvage the deal and/or recover at least $1 billion.”, reacted analyst Dan Ives. In the letter, Elon Musk’s lawyers also discuss recent layoffs of Twitter employees and the hiring freeze. They clearly “list as many reasons as possible to avoid having to pay” the fine, commented analyst Carolina Milanesi for AFP.

On April 25, Elon Musk seemed to have won his bet, despite initial attempts by Twitter to push him away. After being gradually, and discreetly, increased in the capital of the group, he made a definitive agreement with the CA of the group to buy the social network at a price of 54.20 dollars per share, or 44 billion dollars in all. Since then, the title of Twitter has lost more than a quarter of its value. Tesla’s stock also tumbled nearly 25% over that time.

On Thursday, analyst Angelo Zino of CFRA Research mentioned in a note the probable “remorse” of Elon Musk while the price initially proposed is according to the expert who has become “laughable”. The South African-born leader had secured the support of several large fortunes and investment companies to reach the total sum, and reduce the share he had to borrow from the banks. These loans had worried the market, because they were loans backed by Tesla securities.

But beyond financial considerations, the events of recent weeks have shown the gap between the businessman, Texan by adoption, and the San Francisco-based company. Elon Musk is advocating less stringent content moderation and the return of people who were banned for breaking the rules, like ex-President Donald Trump. His vision clashes with that of many Twitter employees, associations and elected Democrats, who, on the contrary, are asking social networks to better fight against hate speech, harassment and misinformation, in the interest of users and democracy. On Twitter, where he is followed by 100 million people, the fiery entrepreneur has multiplied criticism and attacks against the social network, going so far as to publicly make fun of company executives and to send a poo-shaped emoji to the boss of the platform, Parag Agrawal, during exchanges about spam.

“Twitter is in worse shape than when it all started,” notes Carolina Milanesi. “Executives have left, nothing has progressed… But the worst would be if Twitter forces the acquisition to take place”she adds. “They would end up with an owner who doesn’t want the business, and is full of resentment.”


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