Elon Musk ends his Twitter deal
Elon Musk’s tumultuous bid for $44 billion to buy Twitter is on the verge of collapsing – after the Tesla CEO sent a letter to Twitter’s board on Friday saying he was ending acquisition.
Twitter Chairman of the Board Bret Taylor tweeted on Friday that the board is « committed to completing the transaction on the price and terms agreed to with Mr. Musk and plans to take legal action to enforce the merger agreement. We are confident that we will prevail in the Delaware Court of Chancery. »
Twitter could have claimed a billion dollar severance fee that Musk would have agreed to pay under these circumstances. Instead, he appears ready to fight for the deal, which the company’s board has approved and CEO Parag Agrawal has insisted he wants to make it happen.
The eventual outcome of the deal is just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms. Much of the drama unfolded on Twitter, with Musk – who has more than 100 million followers – lamenting that the company hasn’t lived up to its potential as a platform for freedom. expression.
On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5% to US$752.29.
Musk’s attorney, Mike Ringler, wrote in the letter to Twitter dated Friday that for nearly two months Musk researched data to judge the prevalence of « fake or spam » accounts on the media platform. social.
« Twitter has not provided or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that seem unwarranted, and sometimes it has pretended to comply while giving Mr. Musk incomplete or unusable information,” the letter said. He also said the information is fundamental to Twitter’s business and financial performance, and is necessary to complete the merger agreement.
“Since the beginning it has always been a headache to sue Twitter at a US$44 billion price tag for Musk and never made much sense to the street, now it ends (for now) in a twilight zone ending with Twitter’s board against the wall and many on the street scratching their heads over what’s next, » Wedbush analyst Daniel Ives wrote in a note to investors after the release. of the letter.
On Thursday, Twitter sought to shed some light on how it counts spam accounts during a briefing with journalists and business executives. Twitter said it deletes 1 million spam accounts every day. spam accounts represent well under 5% of its active user base each quarter. To calculate how many accounts are malicious spam, Twitter said it examines « thousands of accounts » randomly sampled, using public and private data such as IP addresses, phone numbers, geolocations and behavior. of the account when active, to determine if an account is real.
Last month, Twitter offered Musk access to its « firehose » of raw data on hundreds of millions of daily tweets, according to multiple reports at the time, although neither the company nor Musk confirmed this. Private data, which is not publicly available and therefore not in the data « firehose » given to Musk, includes IP addresses, phone numbers and location. Twitter said this private data helps avoid misidentifying real accounts as spam.
Ringler also alleged that Twitter broke the deal by firing its chief product officer and chief consumer officer, and announcing the layoff of a third of its talent acquisition team. The sale agreement, he wrote, required Twitter to « seek and obtain consent » if it deviated from the normal course of business. Twitter was required to « preserve the material components of its current business organization substantially intact, » the letter states.
Musk’s flirtation with buying Twitter appears to have begun in late March. That’s when Twitter said it contacted its board members — including co-founder Jack Dorsey — and told them it was buying stock in the company and wanted join the board, privatize Twitter or launch a competitor. Then, on April 4, he disclosed in a regulatory filing that he had become the company’s largest shareholder after acquiring a 9% stake worth about $3 billion.
At first, Twitter offered Musk a seat on its board. But six days later, Agrawal tweeted that Musk would ultimately not join the board. His offer to buy the company materialized quickly thereafter.
Musk had agreed to buy Twitter for US$54.20 per share, inserting a « 420 » marijuana reference into his offer price. He sold about $8.5 billion worth of Tesla stock to help fund the purchase, then bolstered his commitments to more than $7 billion from a diverse group of investors, including heavyweights. from Silicon Valley like Oracle co-founder Larry Ellison.
Inside Twitter, Musk’s offer was met with confusion and low morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content moderation decisions.
As Twitter executives prepared to move the deal forward, the company instituted a hiring freeze, halted discretionary spending and laid off two senior executives. The San Francisco company also laid off staff, most recently part of its talent acquisition team.