Offer to buy Twitter: Elon Musk withdraws, the social network begins legal proceedings

Twitter's offer to buy: Elon Musk withdraws, the social network initiates legal proceedings

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It's the end of a dream for some, a nightmare for others: Elon Musk, the boss of Tesla and SpaceX, ended Friday the agreement to buy the social network Twitter for 44 billion dollars. 

In a letter published by the American stock market policeman, his lawyers claim that Twitter did not respect the commitments it had made in the agreement, in particular by not providing all the information requested on the number of spam accounts and fake accounts.

“Twitter failed to comply with multiple terms of the agreement and appears to have given false and misleading information on which Mr. Musk relied to enter into the agreement of acquisition,” the official letter reads.

Twitter has repeatedly said in recent weeks that the number of fake accounts on its platform is less than 5%. The multi-billionaire and his team believe that the network is lying and that this affects the viability of his business, and therefore the value of the company.

For weeks, experts have wondered if Elon Musk was seeking to withdraw his offer or renegotiate the price downwards.

By ending his commitment to buy Twitter, the businessman exposes himself to substantial legal proceedings. Both parties have agreed to pay a severance fee of up to $1 billion in certain circumstances.

The platform's Chairman of the Board of Directors (BoD), Bret Taylor, has moreover tweeted that the Board was “determined to conclude the transaction at the agreed price and terms” and intended to win in court.

All losers

“This is a dire scenario for Twitter and its board, because the company will now have to face Musk in a long legal battle to save the transaction and/or recover at least a billion dollars,” reacted analyst Dan Ives.

In the letter, Elon Musk's lawyers also discuss recent layoffs of Twitter employees and the hiring freeze.

They clearly “listed as many reasons as possible to avoid having to pay » the expected fine, commented analyst Carolina Milanesi for AFP.

On April 25, Elon Musk seemed to have won his bet despite initial attempts by Twitter to push him away.

After gradually and discreetly increasing the group's capital, he made a definitive agreement with the group's board of directors to buy the social network at a price of $54.20 per share, or $44 billion in all.

Since then, Twitter's stock has lost more than a quarter of its value. Tesla's stock also tumbled nearly 25% during this period.

But even if the social network is weakened by the many adventures of recent months, “the worst would be if Twitter forces the acquisition to take place”, notes Carolina Milanesi.

“They would end up with an owner who doesn't want the business and is full of resentment.” 

The five-act saga of Elon Musk's failed Twitter purchase

A diligent court, a engagement announcement, then a brutal breakup: Elon Musk blew hot and cold for three months around a possible takeover of Twitter that was finally aborted.

The stake

On April 4, Elon Musk revealed in a document filed with the Securities and Exchange Commission (SEC), the American stock market regulator, that he had acquired nearly 73.5 million shares of Twitter common stock, or 9.2% of the value on the stock exchange of the company, which flies away on Wall Street.

The next day, the general manager of the social network, Parag Agrawal, announces that the boss of Tesla has joined the board of directors of Twitter , before indicating on April 10 that Elon Musk has given up his seat.

The offer

And for good reason, the whimsical businessman formulates a few days later an offer to buy back the entire company at a unit price of $54.20 per share, a proposal revealed on April 14 by a document sent to the SEC. . He indicates that it is “his best offer and his final offer”.

Twitter initially resists, announcing on April 15 that it has adopted a so-called “poison pill” clause. , according to which the Californian group is ready to sell off its shares for all other shareholders in order to prevent Musk from easily redeeming its shares.

But the group's board ended up giving in and announcing on April 25 a definitive agreement for the takeover by the businessman of South African origin.

Fundraising

The April 29, the SEC reveals that Musk sold 9.6 million shares of Tesla for approximately $8.4 billion.

On May 5, the executive claims to have additionally secured 7.14 billions of dollars in funding from investors including Oracle co-founder Larry Ellison and Saudi Prince and businessman Al-Walid bin Talal.

Musk sows doubt

Then the matter becomes more and more murky. Elon Musk first assures on May 10 that he will allow Donald Trump to reintegrate the social network, he who had been excluded from it after throwing oil on the fire during the assault of his supporters on the Capitol on January 6, 2021.

On May 13, he indicated that he was suspending the takeover because of his concern about the real number of fake accounts on the social network, causing the group's share price to plunge by around 20%. The same day, however, he said he was “still committed” to buying the network.

On May 16, to Parag Agrawal who was trying to explain on Twitter the measures taken to fight against fake accounts, he replied by a poop-shaped emoji.

He again threatened on June 6 to withdraw his offer because the social network “actively resisted” his requests for information on spam and fake accounts, which the platform denies.

On June 16, he had a mixed exchange with Twitter employees, ensuring that he was aiming for one billion users and reiterating his desire to reduce moderation on the site, which has the effect of worrying the employees.

The renunciation

Finally, on July 8, the boss of Tesla and SpaceX informed Twitter that he was ending the agreement because of “false and misleading” information about the company.

Twitter's Board of Directors announces that it will take legal action to enforce the terms of the agreement.< /p>