According to a statement submitted to the U.S. Securities & Exchange Commission, Elon Musk will attempt to back out of his $44 billion Twitter acquisition, saying that the social media business hasn’t adhered to its contractual duties. Musk wanted access to the relevant data, claiming that Twitter is likely undercounting the number of “bot” accounts on its site. He also claims that Twitter’s choice to dismiss two key executives violated the terms of the agreement. The SEC is looking into Musk’s public statements on the purchase of Twitter shares. According to Twitter Chairman Bret Taylor, we are optimistic that we will win in the Delaware Court of Chancery. Musk received some information from Twitter, but the company has remained committed to completing the deal at the agreed-upon price.
Elon said that Twitter had failed to give him the required information on the predominance of phony or spam accounts on its network. According to Twitter, these accounts account for fewer than 5% of all users. Until he received the information from Twitter, which claimed that spam and bot accounts made up fewer than 5% of its total users, he had declared that the agreement was “temporarily on hold.” Musk’s legal team stated in a statement with the US SEC that “Mr. Musk has requested the data and information necessary to make an independent evaluation of the incidence of false or spam accounts on Twitter’s network for almost two months.
Musk is the biggest individual investor in Twitter with a 9.2% stake, making him the company’s largest shareholder. Musk was scheduled to join Twitter’s board on April 4, according to tweets from CEO Parag Agrawal. However, on April 9, Musk declared that instead of accepting a board position, he would launch a takeover bid for the business. Chairman of Twitter Bret Taylor declared, “We are sure we will succeed in the Delaware Court of Chancery. Reuters reports that instead of a judge directing a transaction to be completed, contentious mergers and acquisitions that are brought before Delaware courts typically result in the parties renegotiating agreements or the acquirer paying the target a settlement to withdraw.
The board of directors of Twitter established a “poison pill” plan to resist any efforts at a hostile acquisition of the business. Musk obtained $7.1 billion in funding for the acquisition from Prince al-Waleed bin Talal, Sequoia, Binance, a16z, and other investors after selling Tesla shares valued at about $8.5 billion. Musk announced that the Twitter acquisition was “temporarily on hold” on May 14 after receiving complaints about spam and phony accounts.