The business maniac and CEO of Tesla motor, Elon Reeve Musk pulls out of a $44 billion deal with Twitter.
After a decision made in April to buy Twitter, the world’s richest man leaves everyone wowed as he backed out of the deal.
On the 8th of July, 2022, Elon Musk terminated his business deal with Twitter due to a breach of a provision of the merger agreements. The agreement in section 6.4 of the merger agreements states that Twitter must provide all databases and information as requested by Elon Musk.
Letter Filled Against Twitter
Elon Musk’s lawyer. Mike Ringler, in a letter filled with the United State and exchange commission, said that “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”.
According to Mr. Musk, he waited close to two months to be provided the information. Hence, he decided to terminate the transaction because twitter failed to relinquish information on the number of spam and fake accounts.
Why Elon Musk Wants to Back Out
He believes spam and fake accounts are used to disseminate information and manipulate the way people interact on the platform. And at least 20% or more spam accounts could make up Twitter users.
He said backing out might be difficult because he has put a pen to paper and unclear if he can back out at this stage. However, he will need enough evidence to back his loss of interest in the deal.
To secure the deal, Twitter announces on the 8th of July 2022, that its board plans to take legal action to ensure the merger agreements. One which states that Mr. Musk is expected to pay a sum of $1 billion if he drops the deal.
Response From Twitter
Twitter’s chairman, Bret Taylor, on Friday tweeted their confidence to win in the Delaware Court of Chancery if Tesla’s CEO persists in his legal threat.
Currently, Elon Musk owns 73,486,938 shares of Twitter, which is a 9.2 percent stake in the company.
Due to the fall of the stock market for tech companies in the last few months, Twitter’s share dropped by 6 percent to $34.58. The fall also affected Musk’s Tesla company especially since he announced his interest in buying Twitter.
This is another reason why the world’s richest person, founder of rocket company SpaceX, and CEO of electric car company Tesla may want to stick to his decision.