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Elon Musk Backs Out of Buying Twitter
By: Zoe Hu
On July 8th, Elon Musk backed out of buying Twitter. He claims that he backed out because Twitter did not provide enough information about fake and spam accounts.
Twitter didn’t take the announcement very well, and are planning to sue Elon Musk for breaching their contract. The share price of Twitter dropped more than 7% after the announcement.
"The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk," Bret Taylor who is Twitter Chairman, wrote in a Tweet. And by doing so, possibly starting a potentially long and extended legal fight between the sides. The original agreement for buying Twitter had included a one billion fee if the deal was canceled.
Mr. Musk had said that the agreement was now “momentarily on hold” because he was waiting for data on the amount of fake and spam accounts that were on Twitter.
Mr. Musk thinks that 20% of Twitter is spam or bot accounts, and he has asked the company for evidence to back up their claim of spam and bot accounts only making up 5% of its accounts. Mr. Musk’s lawyer wrote a letter that was filed with the US Securities and Exchange Commission, saying that Twitter failed or refused to provide the information.
The letter says, "[s]ometimes Twitter has ignored Mr. Musk's requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information."
In a filing Mr. Musk claimed that he had asked multiple times for the information on the amount of bots and spam accounts and Twitter, but each time Twitter refused. That is why he decided to cancel the deal.
He has already put pen and paper on this deal, and it is not yet clear if he can back out at this point. Mr. Musk will also need to have proof that Twitter broke their agreement. Twitter will be trying to sue Mr. Musk if he backs out of this deal.
Link to article: Elon Musk pulls out of $44bn deal to buy Twitter - BBC News