Elon Musk ends Twitter buyout deal, legal battle looms

Elon Musk ends Twitter buyout deal, legal battle looms

A portrait of Elon Musk and his Twitter account on the screen of a smartphone, April 14, 2022 in Washington (AFP / Olivier DOULIERY)

A legal battle looms on the horizon after Tesla and SpaceX boss Elon Musk broke a $44 billion takeover deal for Twitter, signaling the end of a dream for some, a nightmare for others

In a letter published Friday by the American stock market policeman, his lawyers assure that Twitter has not respected its commitments made in the agreement, in particular by not providing all the information requested on the number of inauthentic accounts and spam.

“Twitter breached multiple terms of the agreement, and appears to have provided false and misleading information upon which Mr. Musk relied in entering into the acquisition agreement,” the letter said.

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 and value of the company.

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

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

The chairman of the board of directors (CA) of the platform, Bret Taylor, has also tweeted that the CA was “determined to conclude the transaction at the price and on the terms agreed” and intended to prevail in court.

– All losers –

The decision displayed by Elon Musk does not guarantee that the acquisition will not take place. “He signed an agreement that he is legally bound to follow,” tweeted Ann Lipton, a law professor at Tulane University.

“This is a dire scenario for Twitter and its board, as the company will now have to face Musk in a lengthy legal battle to salvage the deal and/or recover at least $1 billion,” analyst Dan Ives said. .

Elon Musk at the inauguration of the "mega-factory" of Tesla in Grünheide, southeast of BerlinGruenheide, on March 22, 2022 (POOL / Patrick Pleul)

Elon Musk at the inauguration of Tesla’s “mega-factory” in Grünheide, southeast of BerlinGruenheide, on March 22, 2022 (POOL/Patrick Pleul)

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 fine, analyst Carolina Milanesi told AFP.

In mid-April, after gradually – and discreetly – rising to the capital of the group, the richest man in the world offered to buy Twitter at a price of 54.20 dollars per share, or 44 billion dollars in all.

“I just have a strong hunch that having a public, broadly inclusive platform that you can trust is extremely important for the future of civilization,” he said at the Ted2022 conference.

The CA first tried to push him back before, on April 25, eventually agreeing to make a final agreement with the libertarian entrepreneur.

Since then, the title of Twitter has lost more than a quarter of its value. Tesla’s stock also tumbled nearly 25% over that time.

– Tragicomedy –

Thursday, analyst Angelo Zino of CFRA Research mentioned in a note the probable “remorse” of Elon Musk while the price initially proposed is, according to the expert, become “laughable”.

The South African-born leader had secured the support of several large fortunes and investment companies to reach the total sum, and reduce the share he had to borrow from the banks. These loans had worried the market, because they were loans backed by Tesla securities.

But beyond financial considerations, the events of recent weeks have shown the gap between the businessman, Texan by adoption, and the San Francisco-based company.

Elon Musk is advocating less stringent content moderation and the return of people who were banned for breaking the rules, like ex-President Donald Trump.

His vision clashes with that of many Twitter employees, associations and elected Democrats, who, on the contrary, are asking social networks to better fight against hate speech, harassment and misinformation, in the interest of users and democracy.

On Twitter, where he is followed by 100 million people, the fiery entrepreneur has multiplied criticism and attacks against the social network, going so far as to publicly make fun of company executives and to send a poo-shaped emoji to the boss of the platform, Parag Agrawal, during exchanges about spam.

“Twitter is in worse shape than when it all started,” notes Carolina Milanesi.

“Executives have left, nothing has progressed… But the worst would be if Twitter forces the acquisition to take place,” she adds. “They would end up with an owner who doesn’t want the business, and is full of resentment.”