Musk does not want to buy Twitter anymore – the company is threatening a lawsuit | News

SAN FRANCISCO (dpa-AFX) – Twitter’s stormy takeover by Elon Musk has hit the level of chaos: tech billionaire withdraws from purchase, but firm wants to get deal in court. The platform that changed the world is headed towards months of uncertainty. Because even if experts see the company in a better position in a legal dispute, it is not known whether you want to force the richest person in the world to take over the one they do not want. In any case, the grueling argument over the transaction took its toll on the short message service.

Musk’s lawyers justified Friday’s retreat with allegedly insufficient information on the number of fake accounts on the short message service. Twitter replied that they are required to complete the sale at an agreed price and plan to take it to court. Twitter shares fell around 5 percent in overtime trading on Friday.

Musk’s twist is no surprise: he has been publicly questioning the numbers on Twitter for weeks. Observers have already interpreted this 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 did not want to stick to the original offer any longer.

Musk planned to buy Twitter in the spring. He has repeatedly emphasized that they are not interested in money, but above all in strengthening the freedom of speech on the platform. So Musk said he would become the former US president banned from Twitter Donald Trump back to 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 retreat on Friday, the newspaper was only $ 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 now argued that Twitter did not provide Musk and his advisory staff with sufficient access to the data to verify the fake account information. Musk’s website describes this as a breach of contractual obligations, which justifies the termination of the purchase contract. US observers doubt whether a court in the US state of Delaware sees it the same way.

To be successful, Musk would have to prove that Twitter withheld such serious information that the deal was no longer profitable under the agreed terms. The dispute is pending before the Delaware Chancellery Court, which may, inter alia, order the completion of the acquisition. In the rare event of a buyer’s waiver being approved, this allowed the Fresenius medical group to cancel its acquisition of the pharmaceutical company Akorn in 2018. The judges found that Akorn’s information about the drug business and outlook contained significant gaps.

Twitter’s chairman of the board, Bret Taylor, was confident the legal dispute would prevail. But some pundits see a big problem: what if Musk just doesn’t pass the verdict? “You don’t put people in jail just because they don’t buy something,” said Zohar Goshen, a professor at Columbia Law School, to the Wall Street Journal.

Musk and Twitter have agreed to a $ 1 billion fine if either side defaults. However, it’s more about problems like unsuccessful financing.

Twitter has estimated – for years – that the number of fake accounts among 230 million active daily users is less than five percent. This is also because the company blocks around a million attempts to create new spam profiles every day. Musk doubted it – even after signing the takeover deal. At the same time, he cannot say he was surprised: even when the purchase plans were announced, he announced that he wanted to defeat automatic bot accounts on Twitter “or die trying”.

Musk is already a major shareholder of Twitter with a solid nine percent stake it bought on the stock exchange before announcing its takeover plans. There was trouble here too. For example, Musk missed the deadline by which the exceeding five percent must be made public. As the share price jumps after that announcement, Musk is accused in an investor lawsuit of saving a lot of money by delaying the purchase of more shares.

Even if Musk insisted that he was not interested in a Twitter transaction for the money, he still had 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. Tesla shares rose 2 percent in overtime trading – since the announcement of the takeover plans on Twitter, the price has dropped around 30 percent.

Founded in 2006, Twitter has become the fastest way to spread the word. However, even before the drama of acquisitions, the website was struggling with slow growth. Twitter recently cut spending by freezing employment – Musk’s lawyers also found it an undesirable interference with the business.

It’s rare to try to cancel acquisitions on this scale, but it does. The French luxury goods conglomerate LVMH (LVMH Moet Hennessy Louis Vuitton) wanted to cancel the 2020 takeover of the American jeweler Tiffany (TiffanyCo), citing the economic downturn during the corona pandemic. Dispute ended as Tiffany accepted a lower bid of $ 131.5 per share instead of the original $ 135 / so / hbr / DP / on

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