Elon Musk announced the withdrawal of his $44 billion bid to acquire Twitter, alleging a “material breach” of contract due to the company’s failure to disclose sufficient details about the number of fake accounts. Elon Musk claimed that the data is essential to Twitter’s operations and financial health and is necessary to complete the deal.
Musk’s attorney Mike Ringler complained that his client had spent more than two months looking for information to assess the incidence of “false or spam” accounts on the social media site. According to a letter submitted by Elon Musk’s lawyers to Twitter’s board, it appears that Twitter has made false and misleading assurances that Mr. Musk has relied on in entering into a merger agreement.
Twitter declares legal war against Elon Musk
Twitter’s board chairman Brett Taylor said in response that the board is committed to completing the transaction at the price and terms agreed with Musk and that they plan to take legal action to enforce the merger agreement. The board is confident he will win the Delaware Court of Chancery.
Elon Musk-Twitter deal: Behind the story
- Elon Musk, who has more than 100 million followers, lamented that the firm was not living up to its potential as a platform for free speech during much of the controversy surrounding the sale.
- Twitter clarified the mechanism for counting fake or spam accounts in a press conference on Thursday. Twitter claims to delete 1 million spam accounts daily. Accounts make up less than 5% of the total number of active users each quarter.
- Twitter claims it reviews “thousands of accounts” chosen at random to verify whether an account is legitimate, using both public and private data.
- Based on multiple reports, Twitter reportedly gave Elon Musk access to a “fire hose” of raw data last month, though neither the business nor Musk acknowledged it.
- The fact that Musk thought he could add value to the company by eliminating its spam bots — the exact issue he is now citing as the reason for halting the deal — led to his interest in taking Twitter private. was one of the main justifications provided for.
- It is particularly worrying that Twitter employees, who were already wary of Musk’s views on staff cuts, publicly joked about the agreement, saying it would be impossible for him to breach his personal commitments.
Tech stocks have been on a steady decline ever since the news of the fake accounts broke. On the other hand, the tech-heavy Nasdaq Composite Index, on the other hand, has fallen 15% as Mr. Musk publicly offered his full cash offer to acquire Twitter for $54.20 per share on April 14.
So by the end of Friday, they were trading at $36.81 per share, and Twitter shares were down about 20%.