Elon Musk Will Not Buy Twitter for $44 Billion Anymore

By: Andrew Lu

Three days ago, Elon Musk announced that he no longer intends to pursue Twitter. The announcement is the newest twist in Mr. Musk’s legacy.

Mr. Musk pulled out of the deal because Twitter didn’t provide enough information about the number of fake or spam accounts on Twitter. The inaccurate number of spam accounts reported can cause depreciation of the value of Twitter. Mr. Musk has mentioned this many times, but Twitter hasn’t responded.

Twitter retorted, saying they’ll take legal actions to secure the deal. This means that the company will sue Mr. Musk.

“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk,” Twitter chairman Bret Taylor tweeted. This sets the company up for a long and harsh legal battle in court. The agreement includes a $1 billion breakup fee for Mr. Musk.

Mr. Musk first thought of buying Twitter in April. Then in May, he said that he’ll keep the deal “temporarily on hold” until he got the data over spam accounts. Mr. Musk asked Twitter for data regarding the total number of spam accounts.

In a letter* to the US Securities and Exchange Commission, Mr. Musk’s lawyer claims that Twitter either failed to provide the data, or they refused to. Importantly the letter claims, “Sometimes 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.”

Now, you may be wondering, why are spam and fake accounts such a big deal? Spam accounts are bots, or people ‘fakely pretending’ to manipulate people’s rightful interactions on Social Media. Twitter later responded with regard to spam accounts, saying it removes around one million accounts every day.

Twitter claims that spam accounts make up less than 5% of all accounts. Though Mr. Musk believes that fake accounts make up 20% or more. For weeks, Musk tried to get information on the spam accounts, but Twitter officials refused and kept silent.

Mr. Musk will have to prove Twitter unlawfully breached the agreement. Twitter would need to prove there is another reason for his exit. The stock market tumbled since April, and that may be a possible cause. (Explained below article at [1] symbol)

Unfortunately for Twitter, after Mr. Musk’s withdrawal, the stock fell more than 7% in extended trading.

Mr. Musk promised free speech after he bought Twitter, but now, he’s out of it. This is the latest headline of the world’s richest person, founder of cheap space travel, and developer of reliable electric vehicles. Could this be the start of a new beginning? Or could it be the end of his legacy? We’ll just have to wait and see.

[1] Mr. Musk took the deal for $54.20 per share, and Twitter stock (NYSE: TWTR) is now priced at $33.06 when Musk terminated the deal. It could be because the stock devalued pretty quickly and Musk wants the deal to be redone.

* The letter filed to the US Securities and Exchange Commission mentioned earlier in this article can be found here:

Source: https://www.bbc.com/news/business-62102821

https://www.sec.gov/Archives/edgar/data/1418091/000110465922078413/tm2220599d1_ex99-p.htm