In a letter published by the American stock market policeman, the lawyers of the boss of Tesla and SpaceX ensure that Twitter has not respected its commitments. The social network immediately announced legal action to “enforce the agreement”.
Elon Musk, the boss of Tesla and SpaceX, told Twitter Friday, July 8 that he was terminating the agreement with the board of directors to buy the social network because of information “false and misleading” on the business.
In a letter published by the American stock market policeman, his lawyers assure that Twitter did not respect its commitments made in the agreement, by not giving all the information requested on the number of inauthentic accounts and spam. Twitter has repeatedly said in recent weeks that the number of fake accounts on its platform is less than 5%. The multi-billionaire and his team believe that the network is lying, and that this affects the viability of his business, and therefore the value of the company.
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For weeks, experts have wondered if Elon Musk sought to withdraw its offer or renegotiate the price downward. By ending his commitment to buy Twitter, the businessman exposes himself to substantial legal proceedings. Both parties have pledged to pay severance pay of up to $1 billion in certain circumstances. The president of Twitter immediately claimed that the company was going to take legal action for “enforce the agreement” redemption. “The Twitter board is committed to completing the transaction at the price and terms agreed with Mr. Musk”assured in a tweet Bret Taylor, specifying that they were “confident” in their chance to prevail in court.
“This is a dire scenario for Twitter and its board, as the company will now have to face Musk in a lengthy court battle to salvage the deal and/or recover at least $1 billion.”, reacted analyst Dan Ives. In the letter, Elon Musk’s lawyers also discuss recent layoffs of Twitter employees and the hiring freeze. They have clearly “list as many reasons as possible to avoid having to pay” the fine, commented analyst Carolina Milanesi for AFP. But even if the social network emerges weakened from the many adventures of recent months, “the worst would be if Twitter forces the acquisition to take place”, notes Carolina Milanesi. “They would end up with an owner who doesn’t want the business, and who is full of resentment.”.
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On April 25, Elon Musk seemed to have won his bet, despite initial attempts by Twitter to push him away. After being gradually, and discreetly, increased in the capital of the group, he made a definitive agreement with the CA of the group to buy the social network at a price of 54.20 dollars per share, or 44 billion dollars in all. Since then, the title of Twitter has lost more than a quarter of its value. Tesla’s stock also tumbled nearly 25% over that time.