By Barbara Ortute, Tom Crischer and Matt O’Brien
Elon Musk announced that he would walk away from his $44 billion offer to buy Twitter, putting the deal on the verge of collapse. The Tesla CEO sent a letter to Twitter’s board on Friday saying he was ending the acquisition.
But Twitter is not accepting Musk’s announcement. Twitter’s chairman of the board, Brett Taylor, tweeted in response that the board is “committed to closing the transaction on the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement.” We are confident that we will win the Delaware Court of Chancery.”
Twitter could have pushed for the $1 billion breakup fee that Musk agreed to pay under these circumstances. Instead, it looks set to fight for the completion of the deal, which has been approved by the company’s board and which CEO Parag Agarwal has insisted it wants to complete.
The possible disclosure of the deal is the latest twist in the saga between the world’s richest man and one of the most influential social media platforms. Much of the drama has been played on Twitter with Musk – who has more than 100 million followers – lamenting that the company has failed to live up to its potential as a platform for free speech.
On Friday, Twitter shares fell 5% to $36.81, far less than the $54.20 Musk offered to pay. Meanwhile, Tesla shares climbed 2.5% to $752.29.
Musk’s lawyer, Mike Ringler, wrote in a letter to Twitter on Friday that Musk has sought data from nearly two months to gauge the prevalence of “fake or spam” accounts on the social media platform.
“Twitter has failed or refused to provide this information. Sometimes Twitter ignored Mr. Musk’s requests, sometimes it rejected them for reasons that appeared to be inappropriate, and sometimes it claimed to have complied, giving Mr. Musk incomplete or unhelpful information. done,” the letter said. It also said that the information is fundamental to Twitter’s business and financial performance, and is needed to conclude the merger agreement.
“This is a disaster scenario for Twitter and its board,” Wedbush analyst Dan Ives wrote in a note to investors on Friday. He predicted a lengthy court battle would be fought by Twitter to either reinstate the deal or to receive the $1 billion breakup fee specified in the contract. “From the beginning it was always a head scratch for Musk to go after Twitter at a $44 billion price tag and never made much sense for the Street, now it’s Twilight ending with Twitter’s board against the wall. ends in the zone (for now) and there are many people scratching their heads on the street who’s ahead.”
On Thursday, Twitter sought to shed more light on how spam accounts count in a briefing with journalists and company executives. Twitter said it deletes 1 million spam accounts every day. Spam accounts represent less than 5% of their active user base each quarter. To calculate how many accounts are malicious spam, Twitter said it randomly sampled “thousands” using both public and private data such as IP addresses, phone numbers, geolocation and how the account behaves when it is active. accounts” to determine whether an account is genuine.
Last month, Twitter offered Musk access to a “firehose” of raw data on his millions of daily tweets, according to multiple reports at the time, though neither the company nor Musk confirmed this. Personal data, which is not publicly available and thus not in the “firehose” data provided to Musk, includes IP addresses, phone numbers and locations. Twitter said such private data helps avoid misidentifying genuine accounts as spam.
Ringler also alleged that Twitter broke the deal when it fired its revenue product leader and general manager of consumers, as well as announced the layoff of a third of its talent acquisition team. The sales agreement, he wrote, requires Twitter to “see and obtain consent” if it deviates from doing normal business. The letter said Twitter was required to “adequately protect the physical components of its existing business organization”.
Musk’s flirtation with buying Twitter began in late March. That’s when Twitter said it contacted members of its board — including co-founder Jack Dorsey — and told them it was buying shares of the company and looking to join the board, take Twitter private or start a competitor. are interested in doing. Then, on April 4, he disclosed in a regulatory filing that he had become the company’s largest shareholder after acquiring a 9% stake for about $3 billion.
First, Twitter offered Musk a seat on its board. But six days later, Agarwal tweeted that Musk would finally not join the board. Their bid to buy the company came together shortly thereafter.
Musk had agreed to buy Twitter for $54.20 per share, including the “420” marijuana reference in its offer price. He sold about $8.5 billion worth of shares in Tesla to help with the purchase, then cemented his commitments by more than $7 billion from a diverse group of investors, including Silicon Valley heavy hitters such as Oracle co-founder Larry Ellison. were involved.
Inside Twitter, Musk’s proposal was met with confusion and falling morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content-restraint decisions.
As Twitter executives prepared to pursue the deal, the company instituted a hiring freeze, halted discretionary spending and fired two top managers. The San Francisco company is also laying off employees, most recently part of its talent acquisition team.