Elon Musk has accused Twitter of disclosing “falsely misleading” information about the number of fake and spam accounts, with the intention of terminating the deal to buy social media groups for $ 44 billion.
Musk’s attempt to withdraw from the deal sets the stage for a high-stakes court battle between billionaire Tesla CEO and a social media platform. Twitter Chairman Bret Taylor will promptly respond that the board has “promised to complete the transaction at the price and terms agreed with Mr. Musk” and will take legal action to implement the agreement. Said.
“We are confident that we will win the case in the Delaware Court of Justice,” Taylor added, referring to a popular place in the business proceedings.
At the filing on Friday, Tesla’s CEO lawyer insisted: twitter It is a “serious breach of multiple provisions” of the sales contract and “[ed] I made a false and misleading expression. ” According to a preliminary analysis by Mask’s advisor, the number of spam and fake accounts on the platform was “much higher” than the 5% estimated by Twitter, Filing said.
Apart from this, according to the filing, mask We’re looking to see if Twitter’s “declining business outlook” and worsening financial outlook violate the agreement.
Filing also said Twitter “on a regular course” after CEO Parag Agrawal imposed a hiring freeze, fired two senior employees, and announced this week that the company would fire one-third. Of that talented team who accused them of failing to comply with their “do business” obligations.
Twitter’s share fell nearly 5% in overtime transactions.
The move is the latest twist on the dramatic story that began when Musk first revealed that he had invested in Twitter in early April, reviving the spirit of “free speech” on the platform. The goal is to tackle spam and stimulate growth.
A few weeks later, Musk sent a shock wave to Wall Street and announced that it would buy Twitter for $ 54.20 per share. This was ultimately accepted by the company. He later said the transaction was “temporarily pending” because of doubts about whether Twitter accurately represented the number of bots and spam accounts. Some analysts and Twitter insiders interpreted this as an expression of buyer’s remorse and speculated that Mask was trying to make a cheaper deal.
Mr. Musk said that if Twitter did not provide information about the fake account, it would be a problem to secure funding from a bank that agreed to lend him cash to complete the transaction. ..
Under the terms of the agreement, Musk can close the transaction by paying $ 1 billion if the transaction cannot be funded. However, US courts have historically supported sellers in court battles when buyers attempt to close a transaction to discourage a buyer from leaving for false reasons.
Since Musk agreed to buy Twitter, the market capitalization of tech companies has plummeted and is valuated higher than its rivals. The stock price of Snap, one of Twitter’s closest competitors, has fallen by more than 65% this year.
When Musk secured $ 46.5 billion in Twitter bids, Musk initially provided $ 12.5 billion in margin loans secured to 12 lenders led by Morgan Stanley and $ 62.5 billion worth of Tesla shares. I did.
In addition, he promised $ 13 billion in funding from a consortium of 13 banks, leaving a hook to raise the remaining $ 21 billion in cash. In May, Musk retired from his margin loan and the equity portion of his bid swelled to $ 33.5 billion.
Part of the margin loan was repaid when the mask was repaid Raised Over $ 7 billion from investors, including Oracle billionaire founder Larry Ellison. Venture Capital Company Sequoia Capital; Prince Saudi Alwarid Bintalal; Cryptocurrency Exchange Binance Among Dozens of Equity Investors. The remaining margin lending facility collapsed when he expired the remaining $ 6.25 billion.
Musk vowed to return freedom of speech to the platform, and in a recent interview with the Financial Times, former President Donald Trump’s “morally wrong” imposed after the deadly attack on January 6, 2021. He said he would overturn the ban. United States Capitol.
In the process of the acquisition, Twitter, which had already been scrutinized due to slowing growth, is in a state of turmoil, and the rest of the staff are worried about their work and the future of the company.