Elon Musk Officially Trying To Get Out Of Buying Twitter
In one of the more predictable events in modern business history, Elon Musk has announced he will not follow through on purchasing Twitter.
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It has finally happened: Elon Musk is formally trying to break the acquisition agreement he proposed on April 14 to purchase the social media platform Twitter. The Tesla CEO is a popular and prolific user of Twitter, which he memorably described as the “de facto public town square” of the world, and seemed at one point determined to outright purchase it. However, his unsolicited attempt to take control of Twitter seemed to quickly go awry, and as many analysts predicted, Elon Musk is trying to avoid making the purchase he once seemed eager for.
Per CNN, an attorney for Elon Musk sent a formal letter to the legal team of Twitter, stating that the South African-born businessman is terminating the merger agreement due to alleged “material breach of multiple provisions of that Agreement” and “false and misleading representations” by the social media platform. The Twitter Board of Directors accepted Elon Musk’s offer of $44 billion (or $54.20 per share) on April 25; the share price of Twitter has fluctuated significantly since that point and it is speculated that Elon Musk has been investigating avenues to cancel the contractual agreement essentially since signing it.
An attorney for Elon Musk stated (per CNBC) that the current wealthiest person in the world “did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement,” which is to make the assertion that an individual has to right to decide whether or not they want to follow the terms of a contract after having agreed to it. As has been pointed out, a merger agreement is not an agreement to investigate whether one wants to investigate a company and make a decision, but an agreement to actually do so.
Elon Musk’s attorney also claims that Twitter voided the agreement by changing its ordinary course of business after the merger agreement by laying off employees and several executives, although it could be argued that both actions are actually part of the course of business of any company. It is also worth noting that Elon Musk himself has already not honored aspects of the merger agreement, such as not disparaging Twitter or its employees; he also at one point claimed that the deal was “on hold” pending investigations into Twitter’s percentage of spam accounts. The merger agreement did not have any mechanism for Elon Musk to delay the acquisition for this (or any) reason, and a class-action lawsuit was filed against him, claiming he had violated corporate law and was attempting to manipulate the market.
Ironically, Elon Musk has been using Twitter to claim that he could not purchase the platform due to what he claimed was a larger percentage of spam accounts than the company claimed. Prior to this, Musk had claimed that if he was in charge of the platform, spam accounts would be completely removed. The merger agreement does not have a clause or stipulation requiring a certain percentage of spam accounts, and Twitter has supplied Elon Musk with a “firehose” stream of data to support his claims (which he has not yet done). In response to Elon Musk’s move to terminate the merger agreement, Twitter board chair Bret Taylor announced that the platform was committed to the merger and is preparing legal action to enforce the agreement.
