Billionaire Elon Musk announced on Friday, July 08, 2022, that he was terminating the agreement to buy Twitter for 44 billion dollars, accusing the social network of having violated its contractual obligations by providing in particular erroneous or incomplete data on the number of fake accounts. In the process, Twitter announced legal action once morest him.
In a letter published by the American stock market policeman, his lawyers assure that Twitter has not respected its commitments made in the agreement, by not giving all the information requested on the number of fake 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 chairman of the board of directors (CA) of the platform, Bret Taylor, has also tweeted that the CA was “determined to conclude the transaction at the price and on the terms agreed” and intended to prevail in court.
A disastrous scenario for Twitter
“This is a dire scenario for Twitter and its board, as the company will now have to face Musk in a lengthy legal battle to salvage the deal and/or recover at least $1 billion,” analyst Dan Ives said. .
In the letter, Elon Musk’s lawyers also discuss recent layoffs of Twitter employees and the hiring freeze.
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.
But even if the social network emerges weakened from the many adventures of recent months, “the worst would be if Twitter forces the acquisition to take place”, notes Carolina Milanesi. “They would end up with an owner who doesn’t want the business, and is full of resentment.”
(With AFP)
