Tesla CEO, Elon Musk, who is the largest shareholder of the embattled micro-blogging platform, Twitter, announced to terminate his deal to buy Twitter on Friday.
Back in March when Musk started a Twitter poll that asked whether Twitter adheres to the fundamental principles of free speech. Around 70% of respondents said ‘no’, and in a follow-up tweet, Musk made an offer to purchase Twitter with one of his intentions to protect free speech. Musk promised to defeat spam or bots and authenticate all humans on the platform.
Being an avid user himself, Musk vowed that he would limit content restrictions, remove fake and automated accounts, and shift away focus from Twitter’s main revenue model i.e. advertising model.
Setting up a high-profile court battle with social network giant Twitter, on Friday, Musk announced he is formally trying to back out from the $44 billion buy-out deal with Twitter.
Is Musk Not Buying Twitter?
Musk offered to buy Twitter for $54.20 a share, back in April. However, his April 25 merger agreement with the Twitter board appears to be a false and misleading representation upon which the Billionaire relied while entering the agreement.
However, according to Twitter’s board member, Bret Taylor, Twitter is still committed and plans to enforce the merger agreement with legal action, at the price agreed upon. Taylor also said, ‘We are confident we will prevail in the Delaware Court of Chancery,”.
In any way, if Musk manages to convince the judge to let him walk away, there’s no doubt, that he will still face a breakup fine of roughly $1 billion. On the contrary, his focus play on the ‘bots’ issue could help him force Twitter to renegotiate the deal at a lower price.
Musk said, raising the bot issues could constitute ‘material adverse effect’ which likely refers to a clause that gives him the ability to pull out of the deal. Only time will tell whether Musk will be enforced to close the deal or walk away with a hefty fine.
Reasons Behind Musk Not Buying Twitter
Elon has repeatedly requested and negotiated the access and information rights within Merger Agreement during regulatory filing. So that he could review all the data and information on all fake/spammy accounts or bots on the platform.
The deal was put on a hold over the bot calculations, ever since Twitter refused or failed to provide data on those accounts for reasons that appeared to be unjustified. Things took a sour turn when Musk’s lawyers revealed Twitter withheld the information about ‘spam’ accounts.
Musk who leads Tesla and Space X, alleges that Twitter violated material breach in multiple parts of the merger agreements. As a result, he appears to have concerns about Twitter’s future business.
The upcoming chapter in this whirlwind process seems to be a court battle. On Tuesday, the Twitter board filed a lawsuit and sues the Billionaire to hold him to a $44 billion bid. Either Musk could face a hefty termination fine or could renegotiate the deal value. For World’s Richest Man, Elon Musk, there is no easy way out.