Why didn’t Elon Musk acquire Twitter? The CEO of Tesla is going to be sued by a social network company for terminating a $44 billion transaction
Elon Musk, the CEO of Tesla and SpaceX, became Twitter Inc.’s largest stakeholder in late March and early April after purchasing a 9.2 percent interest in the company. A few days later, the world’s richest man (as of publication) revealed his intention to purchase Twitter for $44 billion.
Additionally, the business had decided to accept Musk’s offer to buy the social media company and turn it into a private entity. Musk has, however, raised objections to the acquisition in the past three months and claimed that some of Twitter’s user base consists of fraudulent accounts.
The 51-year-old South African national announced on Friday, July 8, in a letter to the US Securities and Exchange Commission (SEC), that he had made up his mind not to proceed with the transaction. Elon Musk was alleged to have requested user information on phony Twitter accounts starting in early May, according to the official complaint.
BREAKING!! Elon Musk has announced that his $44 billion Twitter transaction is being terminated. “because Twitter is materially in violation of a number of the terms of the Agreement,”
Elon Musk is reportedly pulling out of the $44 billion deal to buy Twitter Inc. because of the company’s alleged misrepresentation of “false and spam accounts,” according to the SEC filing. The document added detail:
“Mr. Musk has been looking for the data and information required to “conduct an unbiased assessment of the incidence of false or spam accounts on Twitter’s network” for almost two months. This information is essential to Twitter’s operations and financial results and is required to complete the transactions envisioned by the Merger Agreement in order to facilitate Mr. Musk’s financing and financial planning for the transaction, ensure that Twitter satisfies the closing conditions, and plan the company’s transition.”
Furthermore, it stated:
“Twitter has either omitted to do so or declined to do so. Twitter has occasionally ignored Mr. Musk’s demands, rejected them for apparent unreasonable reasons, and purported to cooperate while providing Mr. Musk with inaccurate or useless information.”
The claim was made in the document that Twitter had violated Section 6.4 of the Merger Agreement by purportedly refusing to grant Elon Musk’s request for access to the mDAU (monetizable daily active user) statistics. Following Musk’s offer, Twitter Inc. reported in April 2022 that the company had over 229 million average monetizable daily active users worldwide.
Elon Musk, however, claimed that Twitter’s assertion that just about 5% of their total user base is made up of fraudulent accounts is untrue. Musk criticized Twitter CEO Parag Agarwal for how he represented user data in a tweet he made on May 17. He stated:
“Yesterday, the CEO of Twitter formally declined to provide evidence of the 5%. He must do it for this deal to proceed.”
Meanwhile, on Thursday, July 7, Twitter executives backed the firm’s claim that spam accounts comprised fewer than five percent of the entire user population. According to Reuters, Twitter’s five percent claim has reportedly stayed steady since 2013. In the briefing’s conference call, the press was informed that the social media giant erased over one million spam accounts everyday. The accounts are those that are fraudulent or automated.
Bret Taylor, the chairman of the board of Twitter, announced that the company will file a lawsuit to ensure that Musk’s transaction would go through. Friday, Taylor noted in a tweet:
The Twitter Board is dedicated to completing the merger at the price and conditions negotiated with Mr. Musk, and it intends to take legal action to make sure the merger agreement is upheld. In the Delaware Court of Chancery, we are sure we will win.
Elon Musk has yet to respond to the aforementioned comment or the deal’s cancellation, despite the fact that he has been particularly outspoken about such controversies on Twitter.