Elon Musk drops Twitter bid; board plans to pursue legal action
$44 billion deal falls apart as legal battle begins
I guess the employees at Twitter dodged a huge bullet.
Self-proclaimed Richest Man In The World Elon Musk announced late Friday afternoon he was withdrawing his $44 billion bid to buy Twitter in a letter he sent to Twitter’s chief legal officer. The reason for the termination of the deal has a lot to do with the failure of the company to provide an accurate snapshot of how many bots and fake accounts are on the platform.
Twitter claims 5 percent of their users are either bots or fake accounts.
However, the Twitter board intends to make Musk hold up his end of the bargain by threating to pursue legal action.
“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.” said Chairman Bret Taylor in a tweet. “We are confident we will prevail in the Delaware Court of Chancery.”
Musk agreed to a $1 billion break-up fee if the deal didn’t go through. It is not known if he intends to follow through on that provision.
Since the deal was announced, Twitter’s stock price has declined significantly, from $51.70 a share when the deal was announced to $36.81 at the end of the day on Friday, with the stock dropping 6 percent. Musk agreed to buy Twitter at $54.20 a share. Since the deal was announced, Twitter instituted a hiring freeze and has laid off hundreds of workers, including dismissing two top managers.
The announcement a little over two months ago of Musk buying Twitter would have meant some big changes for the social media platform and its corporate culture, including a likely move from its longtime headquarters in San Francisco to Austin, Tex. where his Space X and Tesla companies are based, and less and less content moderation. Elon Musk’s takeover of Twitter drew unfavorable comparisons to Sam Zell when took over the Tribune Co. fifteen years ago, at least in this space and we all know where the company wound up after that.
Even though Musk is abandoning the deal, it is puzzling to see why the Twitter board of directors is suing him to uphold it. They indicated they would sue even if he pays the break up fee, so I’m not sure what standing a lawsuit has here, especially since they didn’t provide Musk with what he wanted. Either that or, the board of directors want a big pay day from him and $1 billion isn’t enough.
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