Elon Musk backs out of his deal to buy Twitter
Elon Musk has been in the process of purchasing Twitter for a few months now. There have been bumps along the way, but now, it looks like the deal may be officially over, at least as far as Musk is concerned.
On Friday, the Tesla CEO sent a lengthy letter to Twitter to tell them he was terminating the deal. The letter complained that, for nearly two months, Musk has sought data to judge the prevalence of “fake or spam” accounts on Twitter. It stated: “Twitter has failed or refused to provide this information. 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.” Lawyers for the Tesla CEO will argue that this information is fundamental to Twitter’s business and financial performance, and by its actions, “Twitter has not complied with its contractual obligations.”
Twitter, however, isn’t going easily. Here was Twitter Chair Bret Taylor’s response: “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.”
While stock in Twiiter has been falling since the day the Twitter board accepted Musk’s offer to buy Twitter, it fell another 5% after Musk said he was terminating the deal.
USA Today reports that, “[a]ccording to the filing with the SEC on April 25, the deal calls for Musk to pay Twitter a $1 billion break-up fee if he terminates the deal.” It appears, however, that Twitter wants specific performance, meaning they will ask the court to force Musk to complete the purchase.
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There is no doubt that Elon Musk has a lot of money to throw around. With a net worth of $237.9 billion, a billion-dollar penalty is nothing. But Twitter seems to want to force Musk to go through with the deal. Should he have to?
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