Elon Musk Bailed on the Twitter Deal. Now What?
When it was announced that Elon Musk was looking to purchase Twitter last April, the move was met with instant ridicule. Well, on paper, a self-proclaimed "free speech absolutist" billionaire buying a certain social media site and pledging moderation does sound the alarm.
Considering that the Tesla and SpaceX CEO was one of the platform's biggest critics, his comments on free speech and reforms did not sit well with a lot of folks. It had even triggered some mass resignations within the company.
The $44-billion (About P2.4 trillion) deal and Musk's 9.2-percent stake was nevertheless welcomed by the likes of founder and former Twitter CEO Jack Dorsey and Twitter CEO Parag Agrawal. But as the line from the old Roxette song goes, "but it's over now."
Musk pulled out of the agreement, citing alleged breaches after some nasty hiccups. Twitter, for its part, is looking to take legal action.
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
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The original agreement, after all, had included a $1-billion (Roughly P56 billion) separation fee. Yikes. But there was always something off about the deal from the beginning. Things have dragged out for so long that Musk axing the deal seems like a pretty fitting end to the whole ordeal—at least for now.
Back in May, Musk had said that the deal was put on hold temporarily as he awaited information on the number of fake and spam accounts on the app. Musk and his legal team later on would say that Twitter failed to provide them with enough data on this matter. The company had earlier asserted that the number of dummy accounts was at about five percent.
In a letter filed with the US Securities and Exchange Commission, Musk representatives had said that Twitter ignored some of his requests and that certain information was "unusable." The billionaire space guy had also once claimed that he thinks the number of fake and spam accounts was at about 20 percent.
Twitter has long had a problem with annoying phony accounts and dumb bots spreading misinformation and ruining people. The company has been removing as much as a million accounts a day because of this.
Still, the unraveling of the merger does posit more questions. Is there any other reason that Musk might have wanted to bail on the deal? It is quite possible that Tesla's share price decline when there had been rumblings of a Twitter merger happening had contributed to the break-up. Twitter shares had also fallen by seven percent in extended trading.
Another possible reason is that, well, he just got cold feet. He might have went through all the possible scenarios and all the free speech laws in various regions around the world and just said "screw it, there's a lot more important billionaire stuff to be done."
Are Dorsey and Musk still going to be buddies? Who knows? Whatever the case may be, we're probably looking at a prolonged legal battle here. This is a worst-case scenario thing for Twitter, too, after all. So the company is bound to fight back.
Anyway, grab your popcorn, folks. There's definitely going to be a lot drama.