Elon Musk backs down from Twitter Deal : What Next?
Elon Musk does not want to go ahead with the purchase of Twitter. This was communicated by the lawyers of the tycoon in a letter sent to the address of the social network last Friday.
However, the deal, estimated at 41,000 million euros and announced with great fanfare last April, will continue to kick in the coming months.
According to practically all of the US media, and legal experts in acquisitions, in principle, the social network could have the upper hand in court. According to ‘Reuters’, the Delaware courts, in charge of the case, do not usually make it easy for businessmen to back down on their purchase agreements.
What is certain is that the future of the social network, which is already suffering the effects of Musk’s fright on the stock market, will go through the courts. What will happen is that either the operation will be completed or the expected penalties will be paid.
Twitter will file the lawsuit before the end of this week and will intend to take advantage of a specific compliance clause in the agreement reached by Musk. This gives the company the right to sue you and force you to complete the deal. Although, with everything, it would not get rid of investing millions in the maintenance of the legal team in charge of demonstrating that the reasons given by the employer to get out of the agreement are not enough.
Musk will cling to Twitter’s lack of transparency when it comes to sharing the information necessary to understand the number of fake accounts and spam bots operating inside it, encrypted by the social network at less than 5% of total users. . Something that Musk’s lawyers already made clear in the letter announcing his intention to withdraw from the deal.
In the letter, the legal representatives of Musk affirm that the tools and information that Twitter has made available to be able to compare the figures had “conditions, limitations of use or other characteristics” which has caused “that part of the information is minimally useful to Musk and his advisers.” In the letter, the lawyers also note that, despite the lack of necessary information, the Musk “has been able to partially and preliminarily analyze the accuracy of Twitter’s disclosure,” and the data, although still under review, does not convince him: All indications suggest that several of Twitter’s public disclosures are false or materially misleading.
It is clear, therefore, that Musk’s idea is to get out of the deal without having to pay any penalty, accusing the company of not having been clear when the information necessary to close the deal was requested.
In the trial, Twitter will have to provide all the information shared with Musk, or even more. In the event that, indeed, the court considers that it was not enough, the balance will tip on the side of the employer .
It should be remembered that, at the time, Musk and Twitter agreed to pay $1 billion in compensation if either of them backed out of the deal. However, this clause could not be applied for any reason. For example, the employer could avail himself of it in the event that he could not access the amount necessary to complete the purchase. Twitter, meanwhile, could back out of the deal if it receives a higher financial offer. Something that, considering the current price of the company, is completely unexpected.
However, taking into account that the procedure will be thorny, and, for sure, expensive and long, it is not ruled out that, finally, Twitter and Musk reach an agreement that could lead to the sale of the social network at a cheaper price for the tycoon In this regard, it should be remembered that the deal was closed for a price higher than 54 dollars per share. The price of each one was yesterday, in the afternoon, around 34 dollars.
It should be remembered that, according to Forbes, Twitter has lost $49 billion since the deal was announced. Precisely, the depreciation of the social network led a group of Twitter shareholders a few weeks ago to file a lawsuit against Musk, whom they blame for having harmed the business with his statements.
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