Elon Musk’s tumultuous $44 billion bid to buy Twitter is on the verge of collapse, after Tesla’s CEO sent a letter to Twitter’s board on Friday saying he would terminate the acquisition.
Twitter board chairman Bret Taylor tweeted Friday that the board is “committed to closing the transaction at the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement. We are confident.” in which we will prevail.” in the Delaware Court of Chancery.”
Twitter could have pushed for a $1 billion breakup fee that Musk agreed to pay under these circumstances. Instead, he appears ready to fight over the deal, which the company’s board of directors has approved and chief executive Parag Agrawal has insisted he wants to consummate.
The potential unraveling of the deal is just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms. Much of the drama has played out on Twitter, with Musk, who has more than 100 million followers, lamenting that the company is not living up to its potential as a platform for free speech.
On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 Musk had offered to pay. Meanwhile, Tesla shares rose 2.5% to $752.29.
Musk’s attorney, Mike Ringler, wrote in the letter to Twitter dated Friday that, for nearly two months, Musk has been seeking data to judge the prevalence of “fake or spam” accounts on the social media platform.
“Twitter has failed or refused to provide this information. Twitter has sometimes ignored Mr. Musk’s requests, sometimes rejected them for reasons that seem unjustified, and sometimes claimed to comply while giving Mr. Musk incomplete or unusable information. “the letter said. He also said the information is critical to Twitter’s business and financial performance, and is necessary to finalize the merger agreement.
“From the beginning this was always a head scratcher to go after Twitter at a price of $44 billion for Musk and never made much sense for the street, now it ends (for now) in a twilight zone ending with the Board Twitter policy against him and many on the street scratching their heads over what’s next,” Wedbush analyst Daniel Ives wrote in a note to investors after the letter was published.
On Thursday, Twitter sought to shed more light on how it counts spam accounts in a briefing with journalists and company executives. Twitter said it removes 1 million spam accounts every day. spam accounts make up well under 5% of their active user base each quarter. To calculate how many accounts are malicious spam, Twitter said it reviews “thousands of accounts” randomly sampled, using public and private data such as IP addresses, phone numbers, geolocation, and how the account behaves when active, to determine whether an account it is real.
Last month, Twitter offered Musk access to its “fire hose” of raw data from hundreds of millions of daily tweets, according to multiple reports at the time, though neither the company nor Musk confirmed this. Private data, which is not publicly available and therefore not in the data “fire hose” given to Musk, includes IP addresses, phone numbers and location. Twitter said such private data helps prevent real accounts from being misidentified as spam.
Ringler also alleged that Twitter broke the deal when it fired its revenue product leader and consumer general manager, and also announced the layoff of a third of its talent acquisition team. The sale agreement, he wrote, required Twitter to “seek and obtain consent” if it deviated from conducting normal business. Twitter was required to “preserve substantially intact the material components of its existing business organization,” the letter said.
Musk’s flirtation with buying Twitter appeared to start 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 in the company and was interested in joining the board, taking Twitter private or starting a competitor. Then, on April 4, he revealed in a filing with regulators that he had become the company’s largest shareholder after acquiring a 9% stake worth about $3 billion.
At first, Twitter offered Musk a seat on its board. But six days later, Agrawal tweeted that Musk won’t be joining the board after all. His offer to buy the company came through quickly after that.
Musk had agreed to buy Twitter for $54.20 a share, inserting a “420” marijuana reference into his offer price. He sold roughly $8.5 billion of Tesla stock to help finance the purchase, then strengthened his commitments of more than $7 billion from a diverse group of investors, including Silicon Valley bigwigs like Oracle co-founder Larry Ellison. .
Inside Twitter, Musk’s offer was met with confusion and low morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content moderation decisions.
As Twitter executives prepared for the deal to go ahead, the company instituted a hiring freeze, halted discretionary spending and fired two top managers. The San Francisco company has also been laying off staff, most recently part of its talent acquisition team.