San Francisco (AP) – Elon Musk’s stormy takeover of Twitter has reached a level of chaos: tech billionaire withdraws from purchase, but firm wants to push through the deal in court.
Musk’s lawyers justified the withdrawal on Friday with allegedly insufficient information on the number of fake accounts on the short message service. Twitter was convinced it would win in the legal dispute. Twitter shares fell more than 5 percent in overtime trading on Friday.
Criticism of Twitter by Musk
Musk’s turnaround comes as no surprise: Musk has been publicly questioning the numbers on Twitter for weeks. This was interpreted by observers as an attempt to at least lower the price. In his offer, the deal would be worth over $ 44 billion (around € 43 billion), while Twitter was recently worth around $ 28 billion on the stock exchange. Observers speculated that, given the price difference, Musk was no longer willing to stick to the original offer.
Musk planned to buy Twitter in the spring. He has repeatedly emphasized that he does not mean money, but above all to strengthen the freedom of speech on the platform. Musk said he would let former US President Donald Trump, who was Twitter banned, back onto the platform.
The website’s board of directors initially blocked Musk’s $ 54.20-a-share offer, but then accepted it. Then, in the coming months, shareholders should vote to sell Musk’s stake. Musk’s price would be a good deal for many: even before his payout on Friday, the newspaper was just $ 36.81 of US trade.
Musk has been trying to tackle Twitter’s allegedly fake estimates of spam and fake accounts since mid-May. Therefore, it has already declared the suspension of the takeover agreement. Musk’s lawyers said Twitter had for nearly two months failed to provide Musk and his advisers with the data they needed to verify fake account information. Among other things, connections through interfaces were limited. Musk’s website describes this as a breach of contractual obligations, which justifies the termination of the purchase contract. American observers doubt whether a Delaware court sees it the same way.
Twitter estimates – and has been for some time – that the number of fake accounts is less than 5 percent. Musk doubted it – even after signing the takeover agreement.
Twitter is holding a bargain
Twitter does not want to let Musk out of the purchase contract. Board chairman Bret Taylor said the company is committed to finalizing the sale at an agreed price and plans to take the case to court.
Musk and Twitter have agreed to a $ 1 billion fine if either side defaults. However, it is more about problems such as unsuccessful financing than about a refund.
Musk is already a major shareholder with a good nine percent that he bought on the stock exchange ahead of the announcement of the takeover plans. There was trouble here too. For example, Musk missed the deadline by which it must be made public if the stake exceeded five percent. As the share price jumped after this announcement, Musk is charged in an investor lawsuit that the delay saved him a lot of money buying more shares.
Even if Musk insisted that the deal with Twitter wasn’t about money, he would have to spend some of his fortune on it. The head of electric car maker Tesla and space company SpaceX is by far the richest man in the world – but his fortune, estimated at over $ 220 billion, consists mostly of shares. In order for the money to be liquid, he parted with part of the share certificates. He also wanted to take out loans and get other lenders.
For Twitter, development potentially means more months of uncertainty. The website has already reduced expenses.
Attempts to cancel acquisitions on this scale are rare, but they do. For example, the French luxury goods conglomerate LVMH wanted to cancel the takeover of the American jeweler Tiffany, citing the downturn during the koruna pandemic. The dispute ended when Tiffany accepted a lower bid of $ 131.5 per share instead of the original $ 135.