It was reported Friday that Elon Musk has terminated his $44 billion deal to buy Twitter. The news arrived on the heels of months worth speculation about whether he would acquire the company or not, but it turns out there are multiple reasons for abandoning his pursuit, including what he perceives as a breach in their agreement.
In a surprising development, Twitter Chairman Bret Taylor announced that the board plans to pursue legal action against Musk.
“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,” he tweeted. “We are confident we will prevail in the Delaware Court of Chancery.”
In a surprising development, lawyers for Elon Musk have accused Twitter of failing or refusing to respond and provide information on fake accounts, which are fundamental factors in how the company performs.
“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” the filing wrote.
“Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement.”
Elon Musk, the CEO of Tesla said that he had abandoned his pursuit because Twitter fired high-ranking executives and one third of their talent acquisition team, which breaches the obligation to “preserve substantially intact the material components of its current business organization.”
Twitter explained that Musk is not legally entitled to call off the deal without presenting a solid reason, refusing his spam account information argument.
The company maintained that it provided Musk with all of the information he requested.
If Tesla CEO Elon Musk had maintained his course and acquired Twitter, he would have been able to bring the changes that were promised such as Twitter’s suspension of Trump’s account following last year’s Capitol Riot.
Dan Ives, a Wedbush analyst, weighed in on his opinion of the affairs, saying, “This is a disaster scenario for Twitter. Now the company will battle Musk in an elongated court battle to recoup the deal and/or the breakup fee of $1 billion at a minimum.”
“This soap opera has seen many twists and turns and now ultimately Twitter goes back to the drawing board,” he added. “This was always such a head scratcher to go after Twitter at a $44 billion price tag for Musk and never made much sense to the street, now it ends (for now) in a Twilight Zone ending with Twitter’s Board back against the wall and many on the Street scratching their head around what is next.”
