Elon Musk has backed out of his $44 billion takeover bid for Twitter Inc., and the social media behemoth is feeling the heat. Twitter’s stock dropped 11% on Monday as a result of Musk threatening legal action for breaching their contract.
Due to an alleged “breach” of the merger agreement, the media mogul announced Friday that, barring further negotiations, he is withdrawing his offer to acquire Twitter. He claims that the breach occurred when Twitter failed to provide necessary data on its bot and spam accounts, and he claims that he and his team were not given the necessary information to conduct their own investigation.
The official SEC filing noted that, “While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors.”
Following that filing, Twitter’s board chairman Bret Taylor responded, emphasizing (via Twitter) that “closing the transaction on the price and terms agreed upon with Mr. Musk” is the end goal, and he threatened “to pursue legal action to enforce the merger agreement.” That was followed by an official response via William Savitt of Wachtell, Lipton, Rosen & Katz in a letter made public by an SEC filing.
“Contrary to the assertions in your letter, Twitter has breached none of its obligations under the agreement, and Twitter has not suffered and is not likely to suffer a company material adverse effect. The purported termination is invalid for the independent reason that Mr. Musk and the other Musk parties have knowingly, intentionally, willfully, and materially breached the agreement,” the letter read.
“The agreement is not terminated, the bank debt commitment letter and the equity commitment letter remain in effect, and Twitter demands that Mr. Musk and the other Musk parties comply with their obligations under the agreement…. Twitter reserves all contractual, legal, and other rights, including its right to specifically enforce the Musk parties’ obligations under the agreement.”
Characteristically enough, Musk responded to the threat of a lawsuit late Sunday with a meme of him laughing increasingly hysterically. It read: “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot information. Now they want to force me to buy Twitter in court. Now they have to disclose bot information in court.”
Now, Twitter’s share price has dipped $4.16 – or 11.3% – over the weekend, down to $32.65.
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