Elon Musk no longer wants Twitter. The entrepreneur, boss of Tesla and the richest man in the world, has changed his mind and no longer wishes to buy the social network. But Twitter doesn’t see it that way.
The rag is burning. After weeks of uncertainty and procrastination, Elon Musk therefore gave up buying Twitter. The clues as to a possible abandonment of the operation had been accumulating for several days, but on July 8 a little before midnight (French time), the news fell: the richest man in the world no longer wants the social network . The case is far from over, however.
Twitter wants to force Musk’s hand
In a document shared with the police of the American financial markets (the SEC), the legal team of Elon Musk explains that Twitter did not play fair by lying about the number of fake accounts present on the platform. It doesn’t matter that access to the social network’s raw data was offered to him several weeks ago. The complaint also states that Twitter breached its obligations by firing two platform managers and instituting a hiring freeze last May. According to Musk, this proves that Twitter has committed “a material breach of several provisions of the agreement” since the social network did not continue to follow “the normal course of business” as the buyout agreement required.
But it is not up to Elon Musk, or his army of lawyers, to unilaterally determine who is at fault in this case. Indeed, the takeover agreement signed several months ago does not allow the founder of Tesla to substitute for his obligations like that. Several legislative technicalities authorize Twitter to retaliate, and the company is determined to do so.
Barely minutes after Elon Musk’s about-face, Bret Taylor, chairman of the board of directors of Twitter, announced that he was suing the businessman to force him to keep his promises. “Twitter’s board is committed to completing the transaction at the price and terms agreed to with Mr. Musk and plans to take legal action to enforce the agreement”, asserted the head of the social network. After having done everything to avoid the takeover, Twitter therefore wishes to go to the end of the transaction.
Tough defense for Tesla boss
It must be said that the image of the social network, as well as its stock market value, has been considerably tainted by the procrastination of recent weeks. After the announcement, Twitter’s stock plunged 5% (around $35), as Musk offered $54.20 per share in his takeover bid. Difficult for investors to pass up the jackpot. Especially since, according to a specific clause of the agreement (called “request for execution”), there is a good chance that justice will force Elon Musk to honor his promise in order to limit the damage for Twitter. The contract also contains another safeguard: the payment of 1 billion dollars in the event of non-compliance with the agreement. A sum likely to swell if justice recognizes that Elon Musk has not respected his obligations.
If the boss of Tesla really wants to end this story, he will have to demonstrate that Twitter has committed “serious breaches of the terms of the contract”, which, as things stand, seems difficult to prove. In the absence of a convincing argument, a judge may therefore force the sale at the price set out in the agreement. Anyway, the social network is preparing for a bitter battle. The management of the company asked the employees not to communicate on the case in progress (so as not to take the risk of giving ammunition to the opposing camp) and appealed to the law firm which had already set up the so-called “poison pill” defence.
Meanwhile, Elon Musk keep tweeting provocative messages.