A legal battle looms on the horizon after the termination of a deal to buy Twitter for $44 billion by Elon Musk, the boss of Tesla and SpaceX, marking the end of a dream for some, and a nightmare for others.
In a letter published on Friday July 8 by the American stock market policeman, his lawyers assure that Twitter does not respect the promises made in the agreement, especially by not providing all the information requested in the number of non real account and spam.
“False and misleading information”
“Twitter failed to comply with numerous terms of the agreement, and appears to have provided false and misleading information upon which Mr. Musk relied in entering into the acquisition agreement”indicates the letter.
Taking over Twitter: Elon Musk’s five-date postponement
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 and value of the company. For weeks, experts wondered whether Elon Musk was looking to withdraw his offer or renegotiate a lower price.
By ending his commitment to buy Twitter, the businessman is exposing himself to major legal proceedings. Both parties have pledged to pay a severance payment of up to $1 billion in certain circumstances.
The chairman of the board of directors (CA) of the platform, Bret Taylor, also tweeted that CA is “determined to complete the transaction at the agreed price and terms” and intended to prevail in court.
“A disastrous scenario”
The decision shown by Elon Musk does not guarantee that the acquisition will not take place. “He signed an agreement that he is legally bound to honor”tweeted Ann Lipton, law professor at Tulane University.
“This is a dire scenario for Twitter and its board, as the company now has to face Musk in a lengthy court battle to save the deal and/or recover at least $1 billion.”reaction of analyst Dan Ives.
In the letter, Elon Musk’s lawyers also discussed Twitter’s recent layoffs and hiring freeze. They have clear “list as many reasons as possible to avoid paying” the fine, analyst Carolina Milanesi told AFP.
Agreement after objection
In mid-April, after a gradual – and careful ascent of the group’s capital, the world’s richest man offered to buy Twitter at a price of 54.20 dollars per share, or 44 billion dollars in total.
“I just have a strong hunch that having a public, broadly inclusive platform that you can trust is very important for the future of civilization.”he said at the Ted2022 conference.
CA first tried to push him back then, on April 25, eventually agreeing to make a final deal with the libertarian businessman. Since then, Twitter’s stock has lost more than a quarter of its value. Tesla stock also fell nearly 25% during that time.
On Thursday, analyst Angelo Zino of CFRA Research noted the possibility in a note “repentance” of Elon Musk while the price initially proposed is according to the expert that has been “funny”.
The South African-born leader secured the support of several large companies and investment firms to reach the total amount, and reduce the portion he had to borrow from banks. These loans worried the market, because they were loans backed by Tesla securities.
Two different visions
But more than financial considerations, the events of recent weeks have shown a gulf between the entrepreneur, a Texan by adoption, and the San Francisco-based company. Elon Musk is advocating for less strict content moderation and the return of people who have been banned for violating the rules, such as former President Donald Trump.
His view contradicts that of many employees, associations and elected Democrats on Twitter, who, on the contrary, are asking social networks to better fight hate speech, harassment and misinformation, in the interest of those users and democracy.
“Twitter is in worse shape than when it all started »
On Twitter, where he is followed by 100 million people, the flaming entrepreneur has multiplied criticisms and attacks against the social network, going as far as publicly laughing at company executives and sending a poo-shaped emoji to platform boss, Parag Agrawal, during exchanges about spam.
“Twitter is in worse shape than when it all startedsaid Carolina Milanesi. Executives have left, nothing is progressing… But the worst is if Twitter forces the acquisition to take place. They end up with an owner who doesn’t want the business, and is full of resentment. »