In a nutshell: Elon Musk appears to be following through on his previous threats to back out of his $44 billion deal to buy Twitter. The SpaceX CEO’s legal team has filed a letter with securities regulators alleging that the media giant and Musk entered into the purchase agreement based on false and misleading claims. Unfortunately for Musk, Twitter’s board disagrees and is preparing for legal action to hold him accountable for the originally agreed upon multi-billion dollar price tag.
Letter, filed Musk’s legal counsel on Friday alleges that Twitter representatives failed to meet contractual obligations to provide information about the prevalence of bots, spam accounts and other fake accounts on the platform. Musk’s legal team spokesman Mike Ringler says Twitter ignored requests for information on several occasions, granted unreasonable denials to requests, or responded to Musk with incomplete or inaccurate information, claiming they were abiding by full disclosure.
Musk’s claims that Twitter did not provide account-related data are nothing new. The claims date back to May, when the CEO candidly stated that the buyout was on hold until Twitter provided facts to support the claims in the earlier published Reiter article. Musk and his team remain adamant that this information is needed to conduct a thorough analysis of bots and other fake social media accounts.
Twitter representatives do not appear to be taking the allegations by surprise. Despite claims that the media platform is hiding information related to the agreed acquisition, Twitter CEO Bert Taylor has made it clear that the company will take legal action and intends to enforce the previously agreed terms of the acquisition.
Twitter’s board intends to close the deal at the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement. We are confident that we will win in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
While the result is yet to be determined, news of Musk’s intentions appears to have already weighed in on Twitter’s bottom line. financial data showed share price fell by 5-6% after his statements.
There is no legal guarantee that Musk will be allowed to back out of a multi-billion dollar deal that has already been struck. Under the permanent agreement, either Twitter or Musk could be liable for $1 billion in damages if either party backs out of the agreed-upon offer.
There are also several other possible outcomes, ranging from a repricing of the purchase price or a breakup of the company. fines to another bidder trying to take possession of the acquisition. Any speculation as to the outcome will be nothing more than speculation until more information becomes available.
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