Elon Musk says he’s withdrawing $44 billion bid to buy Twitter

MONTREAL — Elon Musk’s tumultuous $44 billion bid to buy Twitter is on the verge of collapsing — after Tesla’s CEO sent a letter to Twitter’s board saying he was ending the deal. acquisition.

Twitter Chairman Bret Taylor tweeted on Friday that the board “is committed to completing the transaction at the price and terms agreed to with Mr. Musk and plans to sue him to make respect the agreement. We are confident that we will prevail in the Delaware Court of Chancery.”

Twitter could have demanded a $1 billion severance fee that Elon Musk agreed to pay under these circumstances. Instead, he appears ready to fight a legal battle over the deal, which the company’s board has approved and CEO Parag Agrawal has said he wants to complete.

The eventual outcome of the deal is just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms. Much of the saga unfolded on Twitter, with Elon Musk – who has more than 95 million followers – lamenting that the company hasn’t lived up to its potential as a platform for freedom of speech. expression.

On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 that Mr. Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5% to $752.29.

Elon Musk’s lawyer, Mike Ringler, wrote in a letter to Twitter dated Friday that for nearly two months, Mr. Musk researched data to judge the prevalence of “fake or spam (spam)” accounts. on social media platform.

“Twitter failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that seem unwarranted, and sometimes it has pretended to comply while giving Mr. Musk incomplete or unusable information,” the letter reads. . He also said the information is fundamental to Twitter’s business and financial performance, and is necessary to complete the deal.

“It has always been a headache for Mr. Musk to take on Twitter at a price of $44 billion from the beginning and it never made much sense for the stock market, now it ends ( for now) in a nebulous area with Twitter’s board backed against the wall and a lot of people in the stock market scratching their heads over what’s next,” the corporate analyst wrote. Wedbush investment, Daniel Ives, in a note to investors after the letter was published.

Calculate fake accounts

On Thursday, Twitter sought to shed some light on how it counts fake accounts during a meeting with reporters and business executives. Twitter said it deletes 1 million fake accounts every day. These accounts represent less than 5% of active users each quarter.

To calculate how many accounts are fraudulent and malicious, Twitter said it reviews “thousands of accounts” randomly sampled, using both public and private data such as IP addresses, phone numbers, geolocation and account behavior when active, to determine if an account is real.

According to multiple reports at the time, last month Twitter offered Elon Musk access to its repository (firehose) of raw data on hundreds of millions of daily tweets, although neither the company nor Mr. Musk agreed. have confirmed. Private data, which is not publicly available and therefore not in the data repository that was given to Elon Musk, includes IP addresses, phone numbers and location. Twitter claimed that this private data helps avoid falsely identifying real accounts as fake.

Mr. Ringler also alleged that Twitter broke the deal by firing its chief product officer and chief consumer officer, and announcing the layoff of a third of its talent acquisition team.

The sale agreement, he wrote, required Twitter to “seek and obtain consent” if it deviated from the normal course of business. Twitter was required to “preserve the material components of its current business organization substantially intact,” the letter states.

Elon Musk started wanting to buy Twitter in late March. That’s when Twitter said it contacted its board members — including co-founder Jack Dorsey — and told them it was buying stock in the company and wanted join the board, privatize Twitter or launch a competitor. Then, on April 4, he revealed in an official document that he had become the company’s largest shareholder after acquiring a 9% stake worth around $3 billion.

At first, Twitter offered Mr. Musk a seat on its board, but six days later, Mr. Agrawal tweeted that Elon Musk would ultimately not join the board. His offer to buy the company materialized quickly thereafter.

Elon Musk had agreed to buy Twitter for $54.20 a share, inserting a “420” marijuana reference into his price offer. He sold about $8.5 billion worth of Tesla stock to help fund the purchase, then bolstered his commitments to more than $7 billion from a diverse group of investors, including heavyweights. from Silicon Valley like Oracle co-founder Larry Ellison.

Internally at Twitter, Elon Musk’s offer was met with confusion and a drop in morale, particularly after Mr. Musk publicly criticized one of Twitter’s top lawyers involved in moderation decisions. contents.

As Twitter executives prepared for the deal to close, the company froze hiring, halted discretionary spending and laid off two senior executives. The San Francisco company has also furloughed staff, most recently part of its talent acquisition team.

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