Elon Musk the CEO of Tesla and the world’s richest man said on Friday that he is abolishing his deal of $44 Billion Twitter Buyout!
Elon Musk, the CEO of Tesla, founder of SpaceX, and Worlds richest man said that he is terminating his deal to buy out social media company Twitter because the company has breached multiple provisions of the merger agreement.
The Social Media Platform Twitter’s Chairman Bret Taylor, said to peruse a legal right to enforce the merger agreement. He wrote, “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk…”
In a legal filing, Musk’s lawyer has said that the company had failed or refused to respond to multiple requests regarding the information on fake and spam accounts which seems to be fundamental for the company’s business performance.
The Filing said, “Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement”.
Musk also added that he walked away because Twitter fired high-ranking executives and One-third of talent acquisition, breaching Twitter’s obligation to “preserve significantly
intact the material components of its contemporary business organization.”
Legal Battle between Twitter and Elon Musk
Elon Musk’s decision is likely to result in a prolonged legal fight between the billionaire and the 16-year-old Social Media company. However, Twitter is hoping that court proceedings could start in a few weeks and be resolved in a few months, according to a person familiar with the matter.
There are plenty of legal suites filled for deal renegotiation due to the Covid -19 pandemic in 2020. Several companies faced losses and delivered a global economic shock.
Shares of Twitter were down 6% at $34.58 in trading. That is 36% below the $54.20 per share so musk agreed to buy Twitter for in April.
Ann Lipton, associate dean for faculty research at Tulane Law School said on this legal battle, “I’d say Twitter is well-positioned legally to argue that it provided him with all the necessary information and this is a pretext to looking for any excuse to get out of the deal”.
Twitter’s shares surged after Musk took a stake in the company in early April, shielding it from a deep stock market sell-off that slammed other social media platforms.
But after he agreed on April 25 to buy Twitter, the stock within a matter of days began to fall as investors speculated Musk might walk away from the deal. With its tumble after the bell on Friday, Twitter was trading at its lowest since March 2022.
The contract calls for Elon Musk to pay Twitter a $1 billion break-up if he cannot complete the deal for reasons such as the acquisition financing falling through or regulators blocking the deal. The break-up fee would not be applicable if Musk abolishes the deal on his own.
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