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Elon Musk Wants to Terminate $44 Billion Twitter Merger Agreement
By: Michael Chang
In the United States of America, on Saturday, July 9, 2022, Elon Musk, the wealthiest person in the world, announced that he wanted to terminate his $44 billion bid to purchase social media company Twitter because he believes Twitter breached their agreement.
Conversely, according to a tweet from Twitter chairman Bret Taylor, “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk.” These words express how adamant Twitter is about keeping this deal alive.
The merger agreement that Musk signed in April 2022 included a $1 billion breakup fee. However, whether Musk can pull out of the deal at this stage relies upon Musk proving that Twitter breached the signed agreement.
Musk requested termination because Twitter failed to provide enough data regarding the quantity of fake and spam accounts. In May 2022, according to Musk, they paused the deal because he was waiting for this data.
In response, Musk’s lawyer wrote, “Sometimes Twitter has ignored Mr. Musk's requests, sometimes it has rejected them for reasons that appear … unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.” This unsettling quote shows the motivation of Musk’s desire to halt the agreement.
More recently, Musk asked Twitter for evidence to reinforce their claim that bot and spam accounts make up less than five percent of their users. Connecting to Musk’s lawyer’s quote, Twitter refused to give him this information.
While Musk did not get what he asked, Twitter reported that they remove around a million bot accounts daily. Using this statistic and other prior knowledge about Twitter, Musk believes that over 20 percent of Twitter users are bot accounts.
Additionally, Musk potentially had other reasons for requesting to end the merger. One reason may be that stock market prices for large technology companies fell in recent months after his merger announcement. Secondly, since Musk announced his desire to purchase Twitter in April 2022, the cost per share of his other companies like Tesla plummeted.
Musk had lots of plans to revolutionize Twitter if the merger went through. These ideas included decreasing moderation and increasing transparency. However, if he pulls out of this agreement, these ideas may never get implemented on Twitter.