For two long months, the deal goes back and forth, without any advancement. Numerous rumors circle around stating that the billionaire is seeking to terminate the deal, since its beginning. However, now all that might be indeed happening.
Elon Musk is officially seeking to end the $44 billion deal to buy the social media platform Twitter due to supposed several breaches of the agreement. This is the last information that comes out of Elon Musk himself after a two-month saga around it.
Elon Musk Finally Out Of Twitter Deal For Good?
The billionaire supposedly has his reason for his last move. He says that he feels tricked and unsatisfied by the information he acquired from the company after the long negotiation regarding the fake and spam accounts on the platform.
This is accepted with a great amount of anger from the Twitter team. They are now seeking to pursue legal action to enforce the agreement.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk.” – Bret Taylor, who is the chairman of Twitter at the moment states in one of his most recent tweets.
He is referring to getting Twitter’s promised $1 billion ‘locked’ since the beginning as a break-up fee.
The negotiations are not advancing since May when Musk tweeted that he puts the deal ‘on hold’ until he gets the information he seeks. The Tesla and SpaceX CEO demanded that the fake/spam account data be presented to him since upon the start of the deal the social media was claiming that the fake/spam accounts do not exceed 5% of the total number of users.
But can we blame Musk for his backing off from the deal? This is not solely his fault. A great deal of responsibility for it does fall under Twitter’s board of directors. They failed to provide the information he seeks for almost two months. And when you are looking to spend $44 billion that is a long time for getting a response. Since the agreed price is much higher than what the stock market price currently is, they should have done anything to prove what he asks for and close the deal. Instead, they took the matter rather ‘without much interest’ in finishing it.
“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.” – Elon Musk’s lawyer states in the letter sent to the US Securities and Exchange Commission.
Spam and fake accounts are a great ‘machinery’ that is present on Twitter. Most often their use is for spreading information that is ‘untrue’, or controversial to say the least. And the removal of these accounts is a daily activity for the social media. Twitter’s team states that they deleted almost 1 million users yesterday. And that is a daily routine for them. Each day new fake accounts emerge and each day they are struggling to separate them from legitimate accounts and delete them.
According to Elon Musk, at each given moment, the platform has around 20% of fake accounts. And that is a deal-breaker for him.
As a result of this backing up, the shares on the stock market for the social media company notice a fall of about 7% as of this moment.
Finally, it is not unknown that Twitter, and any other social media network for that matter, has issues with bots. However, as Elon states, if the percentage for Twitter is more than 20%, then the problem is indeed great. Twitter’s executives refuse to provide this data to him for weeks, and most certainly, he feels frustration. At last, he is looking to buy the company with his own money. And $44 billion is an amount that is unimaginable for many.
At this point, to finally back out of the deal, Musk needs to prove that they breached the agreement.
Furthermore, this might not be the only reason for Elon’s backing up from the deal. The period is such that the stock market price for many tech companies fell by a considerable amount. At the time Twitter’s shares are worth $54 per share. But now, after almost three months, they are worth $36. This is a fall of 30%. That means that if the deal is to be made at this moment, he could have bought the company for around $30 billion.
Moreover, since the announcement of his interest in Twitter, the billionaire’s remaining companies undergo a massive fall in price on the stock market as well. Take for example Tesla, the share price has fallen by about 30% as well since April.
Many analysts see this backing off from the deal as not based on any matter that is significant. It is more of a ‘the dog ate the homework’ excuse to not proceed. It is as if Musk realized that he has bitten more than he can chew. Especially now, in this time of recession and inflation.
At the moment, Elon Musk is the wealthiest person in the world. His wealth is topping at around $200 billion. He is the CEO of electric vehicles company and the CEO of the rocket company SpaceX. He already has enough on his mind. However, this deal is a result of his willingness to contribute to fueling the ‘free speech’ in the world. For a long time, he is criticizing Twitter for censorship and for extremely Democratic bias.
However, is the whole Twitter saga worth the struggle? Most probably not. And he just realizes this.
