Status: 07/09/2022 00:23
It has been apparent for weeks: Tech billionaire Elon Musk is backing down on the Twitter purchase. His lawyers point to allegedly incomplete information on the number of fake accounts on the online service.
Tech billionaire Elon Musk has canceled his deal to buy Twitter. As a reason, his lawyers referred to allegedly insufficient information on the number of fake accounts, as can be seen from a statement by the US Securities and Exchange Commission.
Twitter immediately announced that it did not want to accept the exit from the takeover deal. They want to enforce the sale at the price agreed with Musk and also go to court for it, wrote the head of the board of directors Bret Taylor on Twitter.
Musk had publicly questioned the Twitter numbers for weeks, which observers interpreted as an attempt to at least push the price down. Twitter shares fell more than 6 percent in following-hours trading following the announcement.
A long legal battle looms
Musk has been trying since mid-May to address Twitter’s allegedly false estimates of the number of spam and fake accounts. He therefore already declared the takeover deal to be suspended. Musk’s lawyers said Twitter had failed to provide Musk and his advisory staff with the data they needed to verify the fake account information for nearly two months. They describe this as such a serious breach of the terms of the contract that the purchase agreement might be terminated.
But Musk shouldn’t be off the hook that easily – there is a risk of a lengthy legal dispute. He and Twitter have agreed to a $1 billion penalty if either party backs out of the deal. But if Twitter insists on enforcement, it should still be legally difficult for Musk. The company had repeatedly emphasized that it wanted to enforce the deal.
Musk offered shareholders $54.20 per share. That would be a good deal for them: Even before Musk’s announcement on Friday, the paper was only $ 36.81 from US trading. Observers had speculated that given the price difference, Musk was no longer willing to stick to the original bid.