Elon Musk goes cold on Twitter buy-out

After announcing in April that he planned to buy Twitter, the richest person on earth has once again sent the world reeling. Elon Musk has now announced that he is ditching his plan to buy Twitter. Musk alleged that the change in plan is due to Twitter making several breaches of the agreement.

Musk said Twitter did not provide enough information about the number of spam accounts. The Tesla founder had asked for evidence to back Twitter’s claim that spam and bot accounts make up less than 5% of its total users. Musk’s lawyer said in a letter that Twitter failed to provide this information.

He also said that Twitter fired high-ranking executives and one-third of the talent acquisition team, breaching its obligation to “preserve substantially intact the material components of its current business organisation.”

Now, a legal battle is expected, as Musk is pulling out of a US$44 billion deal. The social media platform’s chairman Bret Taylor tweeted yesterday that Twitter plans to pursue legal action to enforce the agreement.

The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.

— Bret Taylor (@btaylor) July 8, 2022

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One senior research analyst, Dan Ives, has called Musk’s latest move “the worst case scenario for Twitter.” Ives, who covers the tech sector at Wedbush Securities, said that the expected legal battle will likely plunge Twitter’s stock price. He said that investors and potential acquirers might see Twitter as “damaged goods.”

When Musk announced his plans to buy Twitter, he said he planned to make big changes to the company. These included eliminating fake accounts and relaxing restrictions on content.

But now that Musk has broken the news of his plan to ditch the deal, the world is waiting to see the exchange between Musk and Twitter unfold.

SOURCE: Reuters | BBC | Washington Post