Billionaire Elon Musk canceled his deal to buy social media company Twitter, according to a filing Friday with the Securities and Exchange Commission.
Skaden Arps attorney Mike Ringler said in a letter to Twitter’s chief legal officer that “Twitter has not complied with its contractual obligations.” For nearly two months, the company has failed to provide Musk with information about fake or spam accounts, the letter said.
The news caused Twitter stock to drop as much as 5% in after-hours trading. The stock fell sharply after the Twitter board accepted Musk’s offer to buy the company in April for $54.20 per share. On the day of the announcement, Twitter closed at $51.70 per share. On Friday, it closed at $36.81.
The Tesla and SpaceX CEO is as well known for his polarizing online personas as his entrepreneurial endeavors. He is popular on Twitter, where he has over 100 million followers, and frequently talks politics, talks business openly, and embraces the internet’s meme culture. Some of his tweets have landed him in legal trouble.
Who is Elon Musk?:What to Know About the Tesla CEO Who Wanted to Buy Twitter
Can Elon Musk Go Away M Twitter?
According to a filing with the SEC on April 25, the deal asks Musk to pay a $1 billion break-up fee to Twitter if he ends the deal.
But Musk just might not be able to walk away. Legal observers say Twitter could force Musk to close the deal.
The issue is whether the prevalence of bots on the social media platform is “fundamental to the business and financial performance of Twitter,” as argued by Musk’s lawyers.
“The question is whether this is really physical information,” said UCLA law professor James Park. “It should be fairly clear that a company like Twitter has potentially fake spam accounts.”
“(Musk) might argue this, but I think it’s a weak one,” he said. “To me, it’s just an excuse for him to walk out of the deal.”
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Western Reserve business law professor Annat Allon-Beck told USA Today in an email
“if they don’t at least try to force Musk to shut down.” If they do, they will have allegations of false statements hanging around their necks until they contradict their statements,” Alon-Beck said. “This fight is just the beginning and only time will tell how much fine each side will have to pay to close the deal.”
Jennifer Grigiel, a professor at Syracuse University, said Musk might not be through with the deal just yet.
“Who’s to say he’s still not trying to achieve it?” Grigil said. “We’re still in a finite period of time and we’ll have to wait and see where it all ends.”
What’s clear: Musk will have a legal battle at his hands. Park said the case should move through the Delaware Court of Chancery “very quickly” with a trial and decision “in a few weeks.”
— Bailey Schultz and Terry Collins
Twitter users had
mixed reactions to the Elon Musk reaction on Twitter on Friday.
joked about the change in Musk’s plans,
One enthusiastic Twitter user who hasn’t tweeted about the letter yet: Musk
– Bailey Schultz
GOP: ‘Elon Musk isn’t going to save us’
Conservatives cheered in April when Elon Musk posted “free speech” on the social media platform made an unsolicited $44 billion bid for Twitter, vowing to reinstate.
The response was more muted late Friday when it became clear that Musk would not be the savior the political right had hoped for.
In a regulatory filing, Musk said he was ending the Twitter deal over disagreements over how many spam accounts are on the platform.
Tom Fitton’s opinion? The conservative activist and president of Judicial Watch said Musk was abandoning the Twitter deal because the company refused to disclose details of “its censorship operation.”
Charlie Kirk, founder and president of the conservative nonprofit Turning Point USA, tweeted: “Maybe Elon never intended to buy Twitter. Maybe he just wanted to expose it.“
Donald Trump Jr. announced that Muskmeant walking away from the deal Being caught lying about Twitterspam accounts. “So basically Twitter has a huge amount of spam accounts – by the way they let go – and got busted for it!!!”
“Bottom line,” tweeted Florida GOP congressional candidate Laverne Spicer, “Elon Musk isn’t going to save us.”
Only actor James Woods made a more critical comment, tweeting: “Musk has failed us.” He later deleted the tweet.
It was a far cry from the encouraging way conservatives initially cheered Musk on.
Conservative commentator Dinesh D’Souza began lobbying Musk to buy Twitter in January. His view: Musk will take over and censor the liberals. Teach them a lesson on the “essentials of free speech.”
When D’Souza again urged Musk to buy a major social media platform to dramatically shift the “political and cultural landscape,” Musk replied: “Interesting idea.”
Soon Musk was buying shares of Twitter and was being influenced by other conservative figures.
After bidding for Twitter, the billionaire Tesla CEO garnered millions of followers, many of them conservatives who have accused Twitter, Facebook and Google for years. Anti-conservative bias.
Conservative commentator Brent Bozel, founder and president of the Media Research Center, tweeted: “Finally free. Finally free. Conservatives can finally be free!”
As of Friday night, Bozel had not tweeted a response to the news that Musk was ending his bid for Twitter.
On Donald Trump’s social media platform Truth Social, the former president posted: “The Twitter deal is dead, long live ‘TRUTH.’”
Musk ends a Twitter ‘disaster’
-Wouldn’t even have imagined it in a million years,” said Daniel Ives, senior equity research analyst at Wedbush Securities.
Ives predicts “an uphill battle for Twitter” and “lots of legal twists and turns.”
“This is a disaster scenario for Twitter and its board as the company will now fight Musk in a protracted court battle to compensate for at least a $1 billion deal and/or breakup charges,”
Ives said, noting that Musk has some blame. should take part in
“It’s going to be a black eye for Musk as well,” Ives said. “It doesn’t smell like a rose.”
Grigiel of Syracuse University says she believed from the start that a powerful executive like Musk might have ruthless motives to further Twitter.
“It turns out he didn’t really need to destroy it,” Grigil said.
– Terry Collins
Who is Elon Musk?:What to know about the Tesla CEO who wanted
to buy Twitter When did Musk agree to buy Twitter?
Musk’s $44 billion deal was confirmed in late April after he spent nearly three months buying Twitter shares to increase his stake in the company.
At the time, the world’s richest man said he wanted to “make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, beat spam bots, and authenticate all human beings.” ”
– Bailey Schultz
Why isn’t Elon Musk buying Twitter?
In a word, bots.
Musk claims that Twitter is significantly reducing the spread of spam and fake accounts on the platform.
Twitter says that bots make up just 5% of its monetizable daily active users. In Friday’s regulatory filing, Musk says Twitter appears to have “dramatically underestimated” that figure. Musk has previously argued that the count is 20% or more.
Some observers say Musk is using bots as an excuse to exit the deal.
– Bailey Schultz
How is the Twitter board reacting?
According to Twitter’s chairman of the board, Brett Taylor, Twitter is planning to sue Musk and is committed to closing the transaction.
“We are confident we will achieve victory in the Delaware Court of Chancery,” he said in a tweet.
A former Twitter executive told the Financial Times: “It looks like Twitter is ready to go to war over the deal.”
its latest quarterly report, it warned that its financial position could be “damaged” if the merger is not closed. Falling stock prices, low investor confidence, stockholder lawsuits, and business disruptions were just a few of the possibilities the company determined.
Twitter employees were warned not to make any public statements. An internal memo from Twitter’s general counsel obtained by The Verge instructed employees to refrain from “tweeting, Slacking, or sharing any comment about the merger agreement.”
– Terry Collins and Bailey Schultz