The world’s richest billionaire, Tesla CEO Elon Musk has announced that he has canceled his plan to buy Twitter for $ 44 billion on July 8.
According to Reuters news agency, Musk’s legal team said Twitter violated many provisions of the merger agreement, specifically that Twitter did not provide transparency about the number of spam and virtual accounts of the social network. this association.
“Twitter materially violated many of the terms of that agreement, apparently making false and misleading statements on which Mr. Musk relied when entering the merger agreement,” the CEO’s lawyers said. Elon Musk denounced.
Accordingly, Twitter has claimed that it has less than 5% of active “virtual accounts” and is operated by AI, not humans. However, Elon Musk thinks that this number is much higher than 5% and has asked Twitter to provide evidence.
Billionaire Musk also said he would quit the deal, because Twitter has lost a lot of senior executives and more than a third of talented individuals working at the company. This is a serious violation of the clause “essentially preserving important components of the company’s current business organization”.
Immediately after the news of the deal was announced, Twitter shares fell 6% to $34.58 per share. That’s approximately 35% less than the $54.20 a share when Musk announced a $44 billion deal to acquire Twitter in April. It is thanks to this “promise” of Musk that in April, Twitter escaped the sell-off that caused many social networks to struggle.
Musk’s acquisition of Twitter is one of the biggest deals, shaking the market in 2022. With the recent announcement of the turnaround, many investors believe that Musk cannot afford to pay $ 44 billion. as the announcement.
However, the Tesla CEO also made it clear that the deal will be temporarily canceled until Twitter provides evidence that spam and virtual accounts account for less than 5% of users viewing ads on Facebook. this social network.
“The Twitter board is determined to close the deal at the price and terms agreed with Mr. Musk, and plans to pursue legal action to implement the merger agreement will proceed. We are confident we will win,” said Twitter President Bret Taylor.
Under the agreement, Elon Musk only has to pay a compensation fee of $ 1 billion if he encounters financial problems or has legal problems, and is completely ineffective if Musk unilaterally wants to “bomb goods”. “. Therefore, the Tesla CEO’s decision could lead to a lengthy legal battle between this billionaire and Twitter.
Daniel Ives, an analyst at Wedbush, thinks Musk’s decision is bad news for Twitter. “This is a disaster scenario for Twitter and the board. Because now they will have to fight Musk in court to pay the settlement and receive a break-out fee of at least $1 billion,” he said.
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