Elon Musk pulls out of $44 billion Twitter deal; micro-blogging firm vows legal fight
In a filing, Musk`s lawyers said Twitter had failed or refused to respond to multiple requests for information on fake or spam accounts on the platform, which is fundamental to the company`s business performance.
Elon Musk, the chief executive officer of Tesla and the world`s richest person, said on Friday he was terminating his $44 billion deal to buy Twitter because the social media company had breached multiple provisions of the merger agreement.
Twitter`s chairman, Bret Taylor https://twitter.com/btaylor/status/1545526087089696768?s=20&t=7sx_IvK_zZ..., said on the micro-blogging platform that the board planned to pursue legal action to enforce the merger agreement.
https://tmsnrt.rs/3ACFgY1 after Musk clinched the deal to purchase Twitter in April but then put the buyout on hold until the social media company proved that spam bots account for less than 5% of its total users.
The contract calls for Musk to pay Twitter a $1 billion break-up if he cannot complete the deal for reasons such as the acquisition financing falling through or regulators blocking the deal. The break-up fee would not be applicable, however, if Musk terminates the deal on his own.
Some employees expressed disbelief and exhaustion on Friday, publicly posting memes on Twitter, such as of a rollercoaster ride and a baby screaming into a phone, in apparent commentary on the breakup. Employees have worried about the deal will mean for their jobs, pay and ability to work remotely, and many have expressed skepticism about Musk`s plans to loosen content moderation.
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Musk`s abandonment of the deal and Twitter`s promise to vigorously fight to complete it casts a pall of uncertainty over the company`s future and its stock price during a time when worries about rising interest rates and a potential recession have hammered Wall Street. Shares of online advertising rivals Alphabet, Meta Platforms, Snap and Pinterest have seen their stocks tumble 45% on average in 2022, while Twitter`s stock has declined just 15% in that time, buoyed in recent months by the Musk deal.
Daniel Ives, an analyst at Wedbush, said Musk`s filing was bad news for Twitter.
"This is a disaster scenario for Twitter and its Board as now the company will battle Musk in an elongated court battle to recoup the deal and/or the breakup fee of $1 billion at a minimum," he wrote in a note to clients.
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