Even the richest among us experience buyer’s remorse, too, as Elon Musk officially tries to walk away from his protracted purchase of the social media platform Twitter. However, he won’t be let off the hook as easily as Twitter promised to sue him for the botched deal.
The proposed takeover of Twitter by a small group of investors championed by Tesla CEO Elon Musk has served us drama at every turn. However, Musk has had enough of the intrigues as he has stated his intention to abandon the $44 billion deal.
Musk’s legal team filed documents with the Securities Exchange Commission that revealed his change of heart. He claimed Twitter was in material breach of the agreement between both parties, and Twitter had made “false and misleading statements.”
The document reads in part, “For nearly two months, Mr. Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform. Twitter has failed or refused to provide this information.”
Musk threatened to walk away from the transactions due to bots. He claimed Twitter has more bots than the 5 percent it maintains. Musk’s estimation is as high as 20 percent. He demanded that Twitter convince him of the spam account estimate.
In response, Twitter CEO Parag Agrawal released a lengthy thread that explains how it determines which accounts are spamming and mentioned that it blocks half a million accounts each day. Parag also stressed an outsider couldn’t decide how many bot account Twitter has. Twitter also promised to give Musk access to the “firehose” API that would allow him to see everything Twitter users post.
Twitter later updated its spam blocking stats to one million per day but apparently did not satisfy Musk.
Musk also complains that Twitter breached their agreement by firing a pair of top employees, letting some part of its talent acquisition department, and putting a halt to hiring without obtaining permission. However, the hiring freeze is reminiscent of the one Musk had instructed his top executive at Tesla to implement globally, in addition to letting go 10 percent of its salaried staff.
This is a bizarre conclusion to a journey that started when Musk bought 9 percent of Twitter and refused a seat on the board of directors. However, it is unclear whether Musk can legally scrap the deal because of spam accounts.
At any rate, a court will have to decide if Musk or Twitter had breached the agreement because Twitter has said it would sue Musk in court over the failed acquisition. This suit will join another one brought by the company’s shareholders for Musk tanking Twitter’s stock. There is a lot at stake here for Twitter, whose shareholders stand to gain significantly from the sale if the deal goes through. If Musk is found to have broken the terms of the agreement, Twitter will get $1 billion in compensation.
By proving Twitter breached their contract, Musk is attempting to discard the deal without paying the fine.
Twitter is determined to complete the sale according to a tweet by the chairman of the Twitter board, Bret Taylor, “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. We are confident we will prevail in the Delaware Court of Chancery.”