After several months of uncertainty regarding the purchase of Twitter by Elon Musk following the fog regarding the proportion of fake accounts circulating on the platform, the CEO of Tesla has decided to abandon the transaction. However, the company’s board of directors wants to finalize the deal, and the case could end up in court.
Finally, Elon Musk will not buy Twitter
Since a few months, Elon Musk was reserved with regard to the acquisition of Twitter, referring mainly to the number of fake accounts circulating on the platform. After having made numerous requests to the board of directors of the social network in order to obtain more information on this subject, the CEO of Tesla decided to cancel the transaction.
At the beginning of April 2022Elon Musk had begun to explicitly show his interest in Twitter by buying 9.2% of the shares of the company through a transaction worth over $2.8 billion. He thus became the first majority shareholder of the platform. A few weeks later, the multi-billionaire consolidates its offer by deciding to buy the platform in its entirety for more than 44 billion dollars.
However, according to a document written by Elon Musk’s lawyers for Twitter and filed with the United States Securities and Exchange Commission (SEC), the agreement will not take place. And for good reason, the social network would have lied about the proportion of fake accounts hosted on its platform. Thus, we can read there:
“Mr. Musk is terminating the merger agreement because Twitter is in material breach of several provisions of that agreement, appears to have made false and misleading statements upon which Mr. Musk relied when entering into the merger agreement. merger, and is likely to suffer a material adverse effect from the company. »
Further, the document establishes that Elon Musk has repeatedly insisted on obtaining this informationwithout success :
“For nearly two months, Mr. Musk sought to obtain the data and information necessary to make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform. […] Twitter failed or refused to provide this information. »
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Twitter’s board persists despite everything
Nevertheless, Bret Taylor, the chairman of the board of directors of Twitter, does not intend to stop there. According to him, the transaction must be completed as originally planned.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
—Bret Taylor (@btaylor) July 8, 2022
“Twitter’s board has agreed to complete the transaction at the price and terms agreed to with Mr. Musk and plans to take legal action to enforce the merger agreement. We are confident that we will prevail in the Delaware Court of Chancery. »
However, according to several law professors questioned by our colleagues from Reuters, such an agreement is not so easily abandoned. Indeed, most of the time, the agreements are renegotiated either for revise the purchase price downwards either to decide on a financial compensation agreement.
Also, if the case were to be truly brought before the courts, Elon Musk will have to prove on the one hand that the figures provided by Twitter are false, but he will also have to prove how and to what extent fake accounts could harm the future profits of the platform.
A still unclear purpose
Beyond the information concerning the proportion of fake accounts circulating on Twitter, the platform would however have committed a fault going against the clauses of the initial contract.
Indeed, according to Elon Musk, Twitter would have fired two high-ranking employeesa senior official as well as the general manager of consumers, without his consent, thus going contrary to what was mentioned in the purchase contract.
The future therefore remains uncertain regarding the future of the platform. Will we see the latter decide around a negotiation agreement, or will a real legal battle be engaged?
Note that in any case, most of the time, the courts act in such a way that this type of litigation is favorable to companiesand direct that the transactions be conducted in the manner agreed upon through the initial deed.
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Sources: SEC document, Reuters
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