Elon Musk threatens to cancel the purchase of Twitter
The New York Times recently reported that Elon Musk, the richest man on the planet, is expressing his disappointment in the acquisition of Twitter. Specifically, the billionaire’s lawyer said the social networking platform is “actively opposing and preventing” Musk’s interests in the process of completing a $44 billion settlement. In addition, the company also “denied Musk’s request for data” and did not disclose the exact number of fake accounts on the platform. According to the lawyers, these are enough for Elon Musk to unilaterally cancel the deal.
“Mr Musk has the right to request and Twitter is obligated to provide the data,” the lawyer said.
The letter was sent to Twitter and filed with the US Securities and Exchange Commission, thereby marking the first time that Elon Musk has threatened to abandon the deal in writing instead of using the social network as usual. He believes that Twitter is evading its obligations and may be hiding confidential information that it does not want to be disclosed.
“Twitter investors have been mentally preparing themselves for weeks. Musk’s doubts were expressed in their entirety in the letter to the regulator. From the start, this deal was expected to be very bumpy,” said Susannah Streeter, senior analyst at Hargreaves Lansdown.
Elon Musk threatens to cancel the Twitter deal
Commenting on Elon Musk’s move, a Twitter representative said the $44 billion deal is still going on. “We intend to close the transaction soon at the previously agreed price and terms,” a spokesman said, adding that the company “will continue to cooperate in information sharing with Mr. Musk to complete the transaction.”
Experts say that this is one of Elon Musk’s efforts to pressure prices to lower the price of Twitter shares. The proof is that Twitter shares immediately fell 1.5% in Tuesday trading and closed at $39.56, much lower than his valuation of $54.20 per share. Musk has set out to acquire.
Earlier, in May, Elon Musk also announced on Twitter that he was suspending the acquisition of the social network because the number of fake accounts on the platform was less than 5%. He thinks the actual number should be at least 20%, so the methods of calculating the number of virtual users are extremely “loose”.
“The deal with Twitter will be temporarily shelved until detailed reports on the fake accounts are available. To see if they’re right about 5% of users,” Musk said.
If canceling the Twitter deal, Elon Musk may have to pay a heavy price when facing legal problems
According to The New York Times, Musk’s move will significantly affect Twitter’s business because the deal can be canceled at any time. Legal experts also questioned Twitter’s 5% figure.
“What Musk is doing shows a wise attempt to get out of the deal. Such requests for information are necessary and reasonable,” said Ann Lipton, a professor of governance at Tulane Law School.
However, according to CNBC, if he cancels the Twitter deal, Elon Musk will likely have to pay a heavy price when facing legal problems, even losing billions of dollars in related lawsuits.
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