Elon Musk calls off purchase of Twitter – short message service wants to sue him
Created: 07/10/2022 06:07
By: Christoph Gschossmann
Elon Musk and his takeover of Twitter: it was a stalemate for a long time, now he is making it clear that he wants out of the billion dollar deal.
Twitter announces a lawsuit.
Munich – The back and forth has probably come to an end: Elon Musk doesn't want to buy Twitter after all.
It is a dramatic turn in a takeover crime that has been going on for months: the high-tech billionaire Elon Musk has canceled the purchase agreement with the short message service.
In a letter released by the US Securities and Exchange Commission on Friday, Musk's lawyers accuse Twitter of violating the acquisition agreement sealed in April and making "false and misleading" statements.
The lawyers continue to write that the online platform did not provide the founder of the electric car manufacturer Tesla and the richest people in the world with all the requested information about spam or fake accounts on Twitter.
Musk is therefore exercising his right to "terminate" the $44 billion deal and "abandon" the purchase project.
Musk's holdings, valued at $220 billion, are mostly stocks.
In order to make money liquid, he parted with part of the share certificates.
He also wanted to take out loans and get other lenders on board.
Twitter wants to take Elon Musk to court
Twitter wants to take legal action against this step.
The Twitter leadership immediately announced that they would go to court and use legal means to force Musk to complete the purchase.
Twitter CEO Bret Taylor said the company "intends to complete the transaction at the price and on the terms agreed with Mr. Musk."
Taylor expressed "confidence" of winning in court.
The agreement reached between the two sides provides for a penalty of up to $1 billion if either party backs out.
A lengthy legal battle could develop.
Musk and Twitter agreed in April that the celebrated and controversial entrepreneur would take over the online platform for $44 billion.
Twitter shareholders should get $54.20 per share - a price well above current levels.
Recently, however, there has been a dispute about the number of spam or fake accounts in the influential short message service, which is fighting for more profitability.
Twitter has repeatedly asserted that the number of such accounts is less than five percent.
SpaceX founder Musk and his team believe this information is wrong.
Twitter and Tesla lose value in the stock market
Most recently, observers had wondered whether Musk could really give up the purchase project - or just wanted to lower the price for a takeover.
Since April, Twitter shares have lost more than a quarter of their value.
The shares of the electric car manufacturer Tesla, founded and managed by Musk, have meanwhile lost almost a quarter of their value.
Analyst Dan Ives wrote on Twitter that Musk's plan to buy the short message service for $44 billion had been puzzling from the start and "never made much sense" to Wall Street.
The Twitter purchase plans would also have had a negative impact on Tesla shares.
Analysts had feared that Musk, known for being an eccentric, might be too involved with Twitter and therefore not enough with Tesla.
Musk repeatedly emphasized that he is not interested in money, but above all in strengthening freedom of speech on the platform.
Musk said he would let former US President Donald Trump, who was banned from Twitter, back on the platform.
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"This is a disaster scenario for Twitter"
Now a court battle comparable to "Game of Thrones" will follow, Ives continued.
"This is a disaster scenario for Twitter and its board of directors because the company will now fight Musk in a long court battle to save the deal and/or at least get the $1 billion break-up fee."
"Musk signed an agreement and is still legally bound by it," said law professor Ann Lipton.
However, analyst Carolina Milanesi told AFP that it would be “the worst thing for Twitter” to push through the acquisition agreement against Musk’s will.
"You would find yourself with an owner who doesn't want the company and with a lot of resentment."
(cg with afp and dpa)
A takeover was still conceivable not long ago. Most recently, Elon Musk threatened his potential Twitter employees with dismissal - and proposed new functions.
