Elon Musk informs Twitter that he will not be buying the firm
Elon Musk has canceled his $44 billion purchase of Twitter on Friday, claiming that the firm had made “misleading” claims about the amount of false accounts. This was revealed in a regulatory filing.
By pulling out of the April purchase agreement, Elon Musk opened the door to a protracted legal battle including a billion-dollar breakup fee and other issues.
In a letter to Twitter that was also submitted to the Securities and Exchange Commission, Mr. Musk’s attorneys stated that he had “hereby exercised (the) right to terminate the Merger Agreement and abandon the transaction.”
According to CFRA Research senior equity analyst Angelo Zino, Elon Musk’s change of heart about purchasing Twitter looked to show some “buyer’s remorse” for proposing a price of $54.20 per share that now appears “laughable.”
While Musk has asserted that he thinks the percentage is significantly higher, Twitter has maintained that no more than 5% of accounts are managed by software rather than people.
Musk was under pressure since Twitter’s board had recommended that shareholders support the purchase during a special vote that was scheduled to take place in August.
Given the Musk financing angle and the harsh market environment for risk, the Twitter deal “obviously produced upheaval at Twitter and has resulted in an overhang on Tesla’s price since April,” Wedbush analyst Dan Ives wrote in a letter to investors.
Musk backed loans to purchase Twitter with a portion of his riches in Tesla shares, but as market turmoil and other factors drive down the stock price of the electric vehicle firm, he is now facing margin calls to pay any decline.
Erratic behavior
“I am sure Musk thought he could come out of the gate strong, generate a wave of buzz and then ride it to get investors who want a piece of something that looks like it is going to be big,” said Angelo Carusone, president of nonprofit group Media Matters for America.
“His erratic behavior obviously affected the price of Tesla shares, which undermined the financing everything was set on.”
There were reservations about Tesla, including worries that its CEO was being sidetracked by the Twitter scandal and that, if he owned it, the tech platform would undoubtedly demand his attention.
When Musk declared in May that he would typically allow anyone to express themselves on Twitter in accordance with the law, ultra-conservatives who were angered by efforts to stop bullying, lies, and other abuses on the network hailed him as a hero.
His remarks were made on a significant annual occasion when Twitter and other social media companies regularly seal deals for large-scale advertising deals worth hundreds of millions of dollars.
Carusone said that what Musk pledged to do at Twitter to make it more of a free-for-all would remove barriers that companies want in place to ensure that their advertisements aren’t connected to offensive or worrisome postings.
While everything is going on, Elon Musk is being sued for allegedly manipulating Twitter’s stock price to either offer himself a way out of his takeover effort or to give himself a financial advantage.
