It seems that things have fallen apart so much with the Elon Musk Twitter deal, that Musk has terminated his side of the deal. Twitter sued in response.
The tensions between Elon Musk and Twitter are boiling over. Back in April, Musk made a formal bid to buy Twitter for $44 billion. Far right users, with their narrow one track minds, responded by saying that this deal would mean that they are “owning the libs”. Normal users responded by basically knowing that Twitter was always a cesspool and not some holy grail of a social media platform. In response, there was a massive amount of sign ups for alternatives such as Mastodon and Countersocial. Some of those right wing extremists then called for any user talking about alternatives to be banned from Twitter after. So, the chaos that was caused by Musk is well documented.
Of course, at the time, the deal seemed like all but a sure thing. That “sure thing” became less “sure” when Musk decided to have an argument with Twitter over bots in May. His gut feeling was that the issue of bots on Twitter is much bigger than Twitter is showing. At any rate, the deal was suddenly put on hold because of the argument he decided to have.
In June, the deal cleared the FTC hurdle, but by the time we got to that point, there were other hurdles in the way of the deal. What’s more is that there are lawsuits being filed as well, complicating matters. The overall feeling in the general stock market is that the deal is set to fall through and that stocks were trading accordingly. What’s more is that Musk was growing increasingly offside with the deal, exhibiting signs that he wants out of the deal altogether. While right wingers were proclaiming the deal as a major point where the “libs” are getting “owned”, the only one getting “owned” was Musk himself.
Fast forward to this month and Musk has formally withdrew from the Twitter deal altogether. From The Guardian:
Elon Musk has withdrawn his $44bn bid to buy Twitter after a dramatic few weeks of speculation that his deal to take over the company was falling apart.
“Mr Musk is terminating the merger agreement because 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, and is likely to suffer a Company Material Adverse Effect,” wrote lawyers for Musk to Twitter.
But walking away from the deal will not be straightforward. According to the 95-page acquisition agreement filed with the US Securities and Exchange Commission, Musk will have to prove that Twitter breached the original agreement or risk being sued for a $1bn breakup fee.
In response, Twitter filed a lawsuit against Musk. From the CBC:
Twitter Inc. sued Elon Musk on Tuesday for violating the $44-billion US deal to buy the social media platform and asked a Delaware court to order the world’s richest person to complete the merger at the agreed $54.20 per Twitter share, according to a court filing.
“Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” said the lawsuit.
On Friday, Musk said he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platforms, which is fundamental to its business performance.
Musk, who is the chief executive officer of electric vehicle maker Tesla Inc., did not immediately respond to a request for comment.
The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business.”
Twitter also accused Musk of “secretly” accumulating shares in the company between January and March without properly disclosing his substantial purchases to regulators, and said he “instead kept amassing Twitter stock with the market none the wiser.”
Obviously, this isn’t the extent of the problems going on with this deal at this point. The SEC (Securities and Exchange Commission) is also apparently getting involved. From CNBC:
The Securities and Exchange Commission asked billionaire Elon Musk for more information on a tweet related to his $44 billion acquisition of Twitter that he’s recently tried to call off, a new regulatory filing Thursday shows.
The disclosure sheds light on how Musk represented his commitment to the deal to the SEC, even as he probed Twitter for information on spam accounts on the platform. It also shows how the deal could again bring Musk into the crosshairs of the agency.
In a letter dated June 7, Musk’s lawyer and a Skadden partner, Mike Ringler, responded to questions the SEC’s Office of Mergers and Acquisitions sent a few days earlier.
The letter reiterates the clarification the SEC sought from Musk, including whether an earlier filing should be amended based on his tweet that the Twitter deal “cannot move forward” until the company provides more information on its spam accounts.
“The term ‘cannot’ suggests that Mr. Musk and his affiliates are exercising a legal right under the terms of the merger agreement to suspend completion of the acquisition of Twitter or otherwise do not intend to complete the acquisition,” the SEC wrote, according to the filing. “Yet, we note that the Schedule 13D has not been amended to reflect the apparent material change that has occurred to the facts previously reported under Item 4 of Schedule 13D.”
At this point, there is a lot of moving parts in this. There’s reason to believe that Twitter wants that termination fee in the end. There’s also reason to believe that maybe Musk didn’t intend on buying Twitter from the very beginning. At this point, the details of this acquisition is certainly muddy. After all, you have Musk now wanting to pull out while Twitter is trying to keep him roped in to the deal. You also have a number of lawsuits and investigations to mix everything up as well.
A safe observation to make seems to be that Musk completely screwed things up. As a result, that image of him being this amazing innovative brilliant business personality pushing humanity forward with Tesla, Space X, and other ventures is certainly being challenged. If anything, it seriously raises the question of whether Musk simply got lucky with purchasing these businesses in the first place rather than having some sort of otherworldly foresight. That is certainly not outside of the realm of possibility here. Either way, the deal is looking like one giant mess at this point. It’s hard to say how long it will take to clean it all up after.
Drew Wilson on Twitter: @icecube85 and Facebook.
