Elon Musk

Elon Musk called off his deal to buy social media company Twitter

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When does Elon Musk say to buy Twitter?

In May he declared the purchase was “on hold” while he looked into Twitter’s accounting of how many users are not real people, but automated bots or spam. Soon after, Twitter agreed to give him access to its “firehose” – a real-time stream of more than 500 million tweets posted every day.

And after that April 24: Twitter’s board begins negotiations with Musk. April 25: Twitter agrees to a takeover deal worth $44 billion, with Musk paying $54.20 a share.

Elon musk funding to buy Twitter

Musk originally took a $12.5bn margin loan against the stock of his electric car maker company Tesla to help fund his purchase of Twitter.

But he reduced it to $6.25bn earlier this month after bringing in co-investors. The Tesla CEO and richest man on earth had reached a deal to buy Twitter on 25 April, with Musk offering to buy all of the company’s shares for $54.20 each.

But things took a sour turn when Musk and his lawyers accused Twitter of withholding information about the number of “spam” accounts on the platform.

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Take A Look At The Latest Tweet Of Elon Musk:

Why this decision:

Musk has claimed that Twitter had failed to provide adequate information about fake and spam accounts.

  • Twitter had provided some information but it had some strings attached, use limitations, or other artificial formatting features, which rendered some of the information minimally useful.
  • While acknowledging that Twitter provided access to the eight developers’ “APIs” after initial resistance, the filing from Musk claimed that APIs contained a rate limit lower than what Twitter provides to its largest enterprise customers.
  • The information was not enough to perform an analysis that is fundamental to the company’s business performance.
  • The filing said that Twitter is in material breach of multiple provisions of the Agreement, and appears to have made false and misleading representations upon which Musk relied when entering into the Merger Agreement.

Twitter responded:

  • A legal battle may follow as Twitter’s chairman, Bret Taylor, vowed to pursue legal action to enforce the merger agreement.
  • “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Musk.
  • The terms of the deal require Musk to pay a $1 billion break-up fee if he does not complete the transaction.

Ups and downs come in this deal:

Musk first offered to buy Twitter, and the board adopted a “poison pill” plan in an attempt to block the deal.

  • Twitter subsequently reversed course and relented to a $44 billion buyout, which Musk termed his “best and final” offer.
  • Musk even stitched together a funding arrangement. The buyout was proposed to be funded by $21 billion in cash, $12.5 billion of margin loans secured against Musk’s 16 percent stake in Tesla, together with $13 billion in loans from a consortium of banks.
  • The funding arrangement was recalibrated with Musk reducing the size of the loan against his Tesla shares from $13 billion to $6.25 billion. It was done to address the pressure on the Tesla share price over concerns that Musk might sell Tesla stock as part of the financing deal.
  • Even as financing for the deal was being secured, Musk suddenly indicated that he is keeping the deal in abeyance until the social media company proved that fake and spam bots account for less than 5 percent of its user base.

Why did Elon musk pull out of the Twitter deal?

Elon Musk says he’s withdrawing from his $44 billion deal to buy Twitter, throwing the social media company’s immediate future into doubt. In a securities filing Friday, Musk accused Twitter of lying about the number of bots and spam accounts on the platform.

Issues is that

At issue is whether the prevalence of bots on the social media platform is “fundamental to Twitter’s business and financial performance” as Musk’s lawyers have argued.

UCLA law professor James Park said The question is whether or not this is really material information. it should be fairly obvious that there are potentially fake spam accounts at a company like Twitter.”

He said. (Musk) can make this argument, but I think it’s a weak one,” he said. “To me, this is just a pretext for him to pull out of the deal.”

If they don’t at least attempt to force Musk to close, they’ll have his allegations of false statements hanging around their necks unless they contest his statements,” Alon-Beck said. “This fight is just beginning and only time will tell on how steep a penalty each side will pay to close this deal.

Jennifer Grygiel, a professor at Syracuse University, noted that Musk may not be through with the deal yet.

Grygiel said Who says he’s still not trying to acquire it? We’re still very much in a limbo period and we have to wait and see where this all ends up.”

What is clear: Musk will have a legal battle on his hands. Park said the case should move “very quickly” through the Delaware Court of Chancery, with a trial and a decision “in just a few weeks.”

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