World News | Musk drops deal to buy Twitter; company says it will sue

SAN FRANCISCO, July 9 (The Associated Press) Elon Musk announced Friday that he would back away from a turbulent $44 billion offer to buy Twitter after the company failed to provide enough information about the number of fake accounts. Twitter fired back immediately, saying it would sue the Tesla CEO to keep the deal alive.

The possible unraveling of the acquisition is just the latest twist in the saga between the world’s richest man and one of the most influential social media platforms, and it could herald a huge legal battle.

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In that case, Twitter could have asked Musk to agree to a $1 billion breakup fee. Instead, it looks ready to fight to complete the acquisition, which has been approved by the company’s board and chief executive Parag Agrawal insisting he wants it done.

In a letter to Twitter’s board, Musk’s attorney, Mike Ringler, complained that his clients had been looking for data for nearly two months to determine the prevalence of “fake or spam” accounts on the social media platform.

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“Twitter failed or refused to provide this information. Sometimes Twitter ignored Mr. Musk’s requests, sometimes it denied them on seemingly unreasonable grounds, and sometimes it claimed to be providing Mr. Musk with incomplete or unavailable information. will comply with these requirements,” the letter said.

Musk also said the information is critical to Twitter’s business and financial performance and is necessary to complete the merger.

In response, Twitter chairman Brett Taylor tweeted that the board is “committed to closing the transaction on the price and terms agreed with Musk” and “plans to take legal action to execute the merger agreement. We believe we will Delaware Chancery Court wins.”

Delaware’s trial courts routinely handle commercial disputes between many companies, including Twitter, which are all incorporated in Delaware.

Much of the drama took place on Twitter, where Musk, who has more than 100 million followers, lamented the company’s failure to live up to its potential as a platform for free speech.

Shares of Twitter fell 5% to $36.81 on Friday, well below Musk’s proposed $54.20. Meanwhile, Tesla shares rose 2.5% to $752.29.

“This is a disaster for Twitter and its board,” Wedbush analyst Dan Ives wrote in a note to investors. He predicted Twitter would fight a lengthy court battle to restore the deal or get a $1 billion breakup fee.

“Chasing Twitter at $44 billion was always a headache for Musk from the beginning, never made much sense for Wall Street, and now it’s (for now) ending in a twilight zone with Twitter board opposition A lot of people on the wall and on the street are scratching their heads about what’s next.”

In a briefing with reporters and company executives on Thursday, Twitter sought to shed more light on how it counts spam accounts. Twitter says it removes 1 million spam accounts every day. These accounts are well below 5% of their active user base each quarter.

To calculate how many accounts are malicious spam, Twitter said it reviews a random sample of “thousands of accounts,” using public and private data such as IP addresses, phone numbers, geographic locations, and how accounts behaved while active to determine Determine if the account is genuine.

Last month, Twitter provided Musk with a “fire hose” of raw data on hundreds of millions of daily tweets, although neither the company nor Musk has confirmed this, according to multiple reports at the time.

One of the main reasons Musk is interested in taking Twitter private is because he believes he can add value to the business by getting rid of spam bots — the same issue he now cites as a reason to terminate the deal.

“The whole thing was weird,” said Christopher Bouzy, founder of Bot Sentinel, a research firm that tracks fake Twitter accounts used for disinformation or harassment. “He knows the problem. It’s weird that he would use bots, trolls and inauthentic accounts as a way to get out of the trade.”

On the other hand, Bouzy said, the letter from Musk’s legal team offered some valid criticisms of Twitter’s lack of transparency, including its apparent refusal to provide Musk with the same level of internal data it provided some of its big clients.

“They seem to be hiding something,” said Bouzy, who also believes the number of fake or spam Twitter accounts is higher than what the company reports.

Musk’s lawyers also claimed that Twitter violated the agreement by firing its head of revenue product and general manager of consumers, as well as firing a third of its talent acquisition team.

The sale agreement requires Twitter to “seek and obtain consent” for deviations from normal business, he wrote. The letter said Twitter was required to “retain essential parts of its current business organization substantially intact.”

Musk’s teaser for buying Twitter appears to have started in late March. That’s when Twitter said he contacted board members — including co-founder Jack Dorsey — and told them he was buying stock in the company and was interested in joining the board, taking Twitter private or starting a competitor.

Then, on April 4, he revealed in a regulatory filing that he had become the company’s largest shareholder after taking a 9% stake worth about $3 billion. At first, Twitter offered Musk a board seat. But six days later, Agrawal tweeted that Musk would not be joining the board after all. After that, his offer to buy the company came quickly.

Musk has agreed to buy Twitter for $54.20 per share, inserting a “420” cannabis reference in his offer. He sold about $8.5 billion worth of Tesla stock to fund the acquisition, then bolstered his leadership from various Silicon Valley heavyweights including Oracle co-founder Larry Ellison. more than $7 billion in commitments from various investors.

Inside Twitter, Musk’s proposal was met with confusion and low morale, especially after Musk publicly criticized one of Twitter’s top lawyers for participating in content moderation decisions.

As Twitter executives prepared to move forward with the deal, the company froze hiring, halted discretionary spending and fired two senior executives. The San Francisco company has also been cutting jobs, most recently as part of its talent acquisition team. (Associated Press)

(This is an unedited and auto-generated story from the Syndicated News feed, the body of the content may not have been modified or edited by LatestLY staff)