Elon Musk Set to Terminate His $44 Billion Twitter Deal; Legal Battles and Crashing Stock Prices

0
46
Legal battles and crashing stock prices: Elon Musk Set to Terminate His $44 Billion Twitter Deal
Legal battles and crashing stock prices: Elon Musk Set to Terminate His $44 Billion Twitter Deal
Legal battles and crashing stock prices: Elon Musk Set to Terminate His $44 Billion Twitter Deal

Elon Musk’s activity to terminate the deal denotes the most recent twist in a long pursuing saga after he decided to purchase Twitter in April. What occurs next as the fight goes to court?

In a filing with the SEC (US Securities and Exchange Commission), Musk said he needed to end the arrangement since Twitter was in a “material break” of their previous agreement. He also stated that they had made “bogus and deceiving” statements during talks.

Meanwhile, the social media organization has said it intends to pursue Mr. Musk to implement the arrangement legally.

Musk’s plan to bail out of the arrangement denoted the most recent turn in a long-pursuing saga when he chose to purchase Twitter in April 2022.

Legal battles and crashing stock prices: Elon Musk Set to Terminate His $44 Billion Twitter Deal

Why is Musk pulling out of the deal?

Musk has claimed that Twitter has not provided him with essential data on the prevalence of spam or fake accounts on its platform. This is a worry he had first brought up in May. 

At this point, he had said that the deal was “briefly on hold” until he got the data from Twitter, stating that spam and bot accounts make up under 5% of its total users.

The SEC filing

In his documentation with the US SEC, Musk’s legal team said that “for almost two months, Mr. Musk has looked for the information and data.” 

“This data was necessary to ‘make an independent assessment of the prevalence of phony or spam accounts on Twitter’s foundation,” they said.

Legal battles and crashing stock prices: Elon Musk Set to Terminate His $44 Billion Twitter Deal

They further added, “However, Twitter has ignored or would not give this data. Here and there, Twitter has overlooked Mr. Musk’s requests. Now and again, it has dismissed his requests because of reasons that seem, by all accounts, to be outlandish. Sometimes, it has agreed to give the data but gave Mr. Musk deficient or unusable data”.

Musk said he was backing out because Twitter terminated senior chiefs and 33% of its talent acquisition group. This breaks Twitter’s commitment to “safeguard significantly flawless the material parts of its ongoing business association.”

Other reasons for backing out

Musk has asked the SEC to end the arrangement for these two principal reasons. However, various outside variables might have an impact on his choice.

Right off the bat, tech stocks internationally have seen a massive correction since the deal was made public. On July 9, Twitter’s stock on the New York Stock Exchange shut at a worth of $36.81, in contrast with $51.70 on April 25, when the organization had acknowledged Musk’s offer. This indicated a downfall of almost 29%. Since the arrangement was reported, Tesla’s stock cost has fallen by more than 24%.

Funding issues in the Deal

Furthermore, there were additional questions about how Musk would fund the $44 billion arrangement. 

In May, Musk had told the US SEC that the deal would include $33.5 billion in equity, up from a previous commitment of $27.25 billion. He had additionally sold Tesla stock worth around $8.5 billion. He had arranged about $7 billion from financial backers, including Prince al-Waleed bin Talal of Saudi Arabia. 

Nonetheless, he had told the SEC that he was continuing to look for additional financing. Musk was talking with Twitter investors, including previous Twitter CEO Jack Dorsey, about possibly holding their stakes in the organization. It is unclear if t Musk has figured out how to collect sufficient cash to fund the arrangement.

Legal battles and crashing stock prices: Elon Musk Set to Terminate His $44 Billion Twitter Deal

What happens now?

Musk and Twitter could be in for an extensive legal battle, as the social media platform has clarified that it will pursue legal action to uphold the terms of the arrangement.

“The Twitter Board is focused on completing the exchange based on the cost and conditions settled with Mr. Musk and plans to pursue legal action to authorize the merger agreement. We are sure we will win in the Delaware Court of Chancery,” said Twitter’s chairman Bret Taylor.

The first consolidation understanding likewise incorporates a $1 billion breakup fee.

As per Reuters, mergers in dispute and acquisitions that land in Delaware courts, as a general rule, end up with the parties re-negotiating the deals or the acquirer paying the target a settlement to leave, as opposed to a judge requesting that an exchange be completed.

Subscribe to Shouzy for more info!

Previous articleCAMERON DIAZ IS BACK! GOOD NEWS FOR FANS
Next articleWhich Tech Leaders Lost Billions Like Elon Musk?
Zaid Quraishi
My name is Zaid Quraishi. I pride myself on being a meticulous and organized individual who has done his Bachelors in Medical Technology and currently pursuing my Master's in the same course from Sher-e-Kashmir Institute of Medical Sciences. I belong to the beautiful valley of Kashmir, and my hometown is Srinagar. I am the elder sibling of my younger brother. As far as my strengths are concerned, I am effectively communicative, optimistic, reliable, a team player, and time-efficient. My weaknesses are that I am an honest person and I tend to be blunt, and sometimes, I like to work alone. I am passionate about content writing, online gaming, and learning new things, especially languages (currently German). I have written two papers for my University degree, which helped me immensely in learning how to write effectively. I am confident in my writing skills, and I can effectively pour my thoughts out in writing and express myself so that the reader relates to it and is intrigued by the content. I love to play with my pet cat, and she is a darling to me. The thing that I dislike the most is being distracted when you are in the zone. Currently, I am a content writer in a dynamic work environment at Shouzy, ready to improve readers' satisfaction and increase retention levels.

LEAVE A REPLY

Please enter your comment!
Please enter your name here