The billionaire Elon Musk withdrew his $44 billion bid to acquire Twitter on Friday.
To compel the sale to go through, the dominant social media company now intends to file a lawsuit against the Tesla CEO. Due to Twitter’s failure to offer sufficient information regarding the number of phony accounts using its network, Musk claimed he was ending the largest buyout in recent memory.
In April, Twitter and Musk agreed that each side would be required to pay a $1 billion fine if they decided to back out of the contract. Twitter might have pushed for the break-up fee after the CEO of SpaceX withdrew, but instead, it is getting ready for a fight to finish the deal.
Mike Ringler, an attorney for Musk, stated in the letter that his client had been looking for information about the frequency of “fake or spam” accounts on the social media site for almost two months.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for unjustified reasons, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” the letter said.
Musk also said the information was fundamental to the company’s business and financial performance and was needed to finish the transaction.
In response, the chair of Twitter’s board, Bret Taylor, tweeted that the board was “committed to closing the transaction on the price and terms agreed upon” with Musk and “plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
The potential collapse of the agreement is merely the most recent twist in a story involving the richest man in the world and one of the most powerful social media sites. Most of the controversy has taken place on Twitter, where Musk, who has over 95 million followers, has complained that the network isn’t living up to its potential as a place for free speech.
On Friday, shares of Twitter fell 5 percent to $US36.81, ($53.61) well below the $US54.20 ($78.92) that Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5 percent to $US752.29 ($1095.40).
In a letter to the Securities and Exchange Commission, Musk said Twitter has “not complied with its contractual obligations” surrounding the deal, namely giving Musk enough information to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.”
Here is a summary of what has happened so far in Elon Musk’s pursuit of Twitter, from a hostile takeover proposal to Twitter’s “poison pill” defense to threats to cancel the acquisition.
January 31, 2022: Elon Musk starts increasing his stake in Twitter. His stake in the micro-blogging site increased to five percent.
March 24: Criticising Twitter, Musk asks users in a tweet, “Free speech is essential to functioning democracy. Do you believe Twitter rigorously adheres to this principle?”
March 26: In another tweet, Musk says he is giving “serious thought” to building an alternative to Twitter, questioning free speech on the platform and whether Twitter is undermining democracy
April 4: Musk buys a 9.2 percent stake in Twitter, thus becoming the largest shareholder of the micro-blogging site. He made a passive investment of 73.5 million shares of common stocks in his personal capacity.
April 5: Twitter offers Musk a seat on the company’s board. CEO Parag Agrawal says in a tweet that “it became clear to us that he would bring great value to our Board.”
April 11: Twitter CEO Parag Agrawal announces Musk will not be joining the board after all.
April 13: A group of Twitter investors files a complaint in the New York Federal Court alleging Musk of delay in revealing his stake in Twitter so that he could buy more shares in the company at a cheaper price.
April 14: The Tesla CEO offers to buy the microblogging site worth $41.39 billion for $54.20 per share, and at a 38 percent premium to the closing price of Twitter’s stock on April 1, the last trading day before Musk bought the majority stake in the company. In a letter to Twitter Chairman Bret Taylor, Musk says that this is his best and final offer, and if not accepted, he would need to reconsider his position as a shareholder.
April 14: Advocating for free speech, Musk suggests that Twitter should consider doing an open-source algorithm. In another statement, he says that he is not sure about acquiring the microblogging site, but if his bid for Twitter fails, the billionaire has a Plan B.
April 16: Twitter adopts the ‘poison pill’ defense to wield Musk’s attempt at a hostile takeover.
April 25: Musk reaches a deal to buy Twitter for $44 billion and take the company private. The outspoken billionaire has said he wanted to own and privatize Twitter because he thinks it’s not living up to its potential as a platform for free speech.
April 29: Musk sells roughly $8.5 billion worth of shares in Tesla to help fund the purchase of Twitter, according to regulatory filings.
May 5: Musk strengthens his offer to buy Twitter with commitments of more than $7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.
May 10: Musk hints at reversing the Twitter ban of former US President Donald Trump following the Capitol Hill riots of January 6, 2021. He calls the ban a “morally bad decision” and “foolish in the extreme.”
May 13: Musk says his plan to buy Twitter is “temporarily on hold”. He says that he needs to pinpoint the number of spam and fake accounts on the social media platform. Shares of Twitter tumble, while shares of Tesla rebound sharply.
June 6: Musk threatens to end his $44 billion agreement to buy Twitter, accusing the company of refusing to give him information about its spam bot accounts.
July 8: Elon Musk said he intends to terminate his acquisition of Twitter because the social media company breached multiple provisions of the merger agreement. Twitter Chairman Bret Taylor tweeted the company “is committed to closing” the deal and plans to “pursue legal action to enforce the merger agreement.”