Elon Musk doesn’t want to buy Twitter anymore.
Legal documents filed by Musk’s legal counsel yesterday can confirm that the Tesla and SpaceX CEO is walking away from the $44 billion deal because he thinks that Twitter has been “in material breach” of multiple provisions of the merger agreement.
One of the major ones is that Musk believes Twitter isn’t being honest about the makeup of its users. The business magnate and investor, who has a net worth of over $200 billion, thinks that there are more bots and fake accounts than what the platform has been letting him in on, effectively voiding the deal.
Twitter isn’t pleased and will do what it can to get the acquisition through, according to a recent tweet from Bret Taylor, Twitter’s chairman, who confirmed that the company will be taking legal action to enforce the merger agreement.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr Musk and plans to pursue legal action to enforce the merger agreement,” tweeted Bret Taylor, Twitter’s chairman. “We are confident we will prevail in the Delaware Court of Chancery.”
Twitter provided an estimate earlier this year about how spam and fake accounts comprised less than 5% of its users, something that Musk apparently didn’t agree with. The company also recently reported a rise in daily active users to 229 million based on advertising data, although internal errors have resulted in the company overstating user numbers in the past.
Musk had claimed that he’d be bringing all kinds of changes to Twitter, including an edit button and long-form tweets, something that would allow users to go beyond 280 characters per post. He also hinted that Twitter’s algorithm might be made public.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
Mr Musk’s letter made clear that his lawyers considered the agreement to be cancelled because of what he believes to be a failure to provide detailed information about fake accounts and Twitter’s measures of daily active users.
It closed by confirming that his lawyers intended to terminate the agreement and abandon the transaction.
But Mr Taylor’s tweet indicates that Twitter will be fighting that decision, and forcing Mr Musk to uphold the agreement.
The merger agreement includes a $1bn breakup fee that was supposed to be paid by Mr Musk to Twitter in case the deal did not go through. But Mr Taylor’s tweet suggests that it will instead push for the deal to be completed.
Source: SEC (via The Independent)
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It will only cost him $1B in breakup fees and subsequent legal fees, but that penalty was probably made up by the share price at the time of the deal.
He did cash out about 8.4B in stock, 7.1B was in "financing" from other wealthy investors (basically commitments to buy large amounts of TWIT shares after the sale). Up to 12.5B was a loan, with the rest of his TSLA shares as collateral. 21B was other unspecified equity (Source)
I am not 100% certain on that though, I've never had the luxury of being a multi-billionaire with all my wealth tied up in the stock market. But if he just up and sold Billions worth of stock one day, and it happened to be on a high water mark -- it has a good chance of causing the stock to tank, he would probably get brought up on charges of stock manipulation (maybe not found guilty, but at least investigated), and generally people would be very unhappy with him.
But if he's doing it to buy some useless web service not many people really care too much about and makes a huge stink about that -- everyone is distracted by the shiny object in one hand, and the market doesn't notice he just dumped an assload of shares and won't react to that.
FYI -- TSLA stock still fell when he announced he was unloading a bunch, but it didn't nose dive and recovered fairly quickly. And even at that he had to get Board approval for the sale, and the SEC was notified.
That people still don't see him as the fraud that he is is only proof how good he is at lulling people.
He is the master of overpromising and underdelivering, if delivering anything at all, because in most cases he doesn't, just passes on his lunacy to gullible investors, who are left holding the bill at the end of the....tunnel.
His ideas are on par with solar roadways, or are you also on board with that grift?
Elon Tells Twitter He Needs Moar Data, Twitter Gives It to Him
I don't know. Just that every article out there has statements from Musk's lawyer on the matter.
Seems to me that Twitter's board has been dragging there feet while they figure out a way to "cook the books".
From the charge the Musk lawyers are claiming, it has a very, very low successful prosecution rate.
(Link, cached)
"Early Monday, Musk tweeted four images of him laughing next to captions that read: “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot information. Now they want to force me to buy Twitter in court. Now they have to disclose bot information in court.”"