Elon Musk pulls out of $44bn deal to buy Twitter Elon Musk is seeking to end his $44bn (36bn) bid to buy Twitter, alleging multiple breaches of the agreement. The announcement is the latest twist in a long-running saga after the world's richest person decided to buy Twitter in April. Mr Musk said he had backed out because Twitter failed to provide enough information on the number of spam and fake accounts. Twitter says it plans 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," Twitter chairman Bret Taylor wrote in a tweet, setting up a potentially long and protracted legal battle between the two sides. The original merger agreement includes a $1bn (830m) break-up fee. Row over fake accounts In May, Mr Musk said the deal was "temporarily on hold" as he was awaiting data on the number of fake and spam accounts on Twitter. The billionaire businessman had asked for evidence to back the company's assertion that spam and bot accounts make up less than 5% of its total users. In a letter filed with the US Securities and Exchange Commission, Mr Musk's lawyer said Twitter had failed or refused to provide this information. "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," the letter reads. Spam accounts are designed to spread information to large numbers of people and manipulate the way they interact with the platform. On Thursday, Twitter said it removed around 1 million such accounts each day. Mr Musk believes that spam or bot accounts could account for 20% or more of Twitter users. Shares in Twitter fell by 7% in extended trading after the announcement. Elon Musk has for weeks been trying to get information about how many daily active users Twitter has. Twitter has a problem with bots. In fact only yesterday it said it removed a million spam accounts a day. In a filing, Mr Musk said he'd repeatedly been refused information about the number of bot accounts on Twitter - which is why he wished to terminate the deal. Elon Musk though has already put pen to paper on this deal, and it is not totally clear whether he can back out at this stage. Mr Musk will need to prove that Twitter breached their agreement. There are other potential reasons why Mr Musk might want to pull out of the deal. The stock market price for large tech companies has fallen steeply in the last few months - did Musk offer too much? And then there was the impact the potential merger was having on Mr Musk's other companies. Tesla's share price has fallen significantly since he announced his interest in Twitter. His position on free speech and how Twitter might moderate in the future - based on the laws of individual countries - also at times came across as nave. Did Elon Musk ultimately decide he had bitten off more than he could chew? Twitter sues Elon Musk over $44bn takeover deal Twitter is suing billionaire Elon Musk to try to force him to buy the social media firm, setting up a legal battle with the world's richest man. It comes after Mr Musk announced he was walking away from his proposed $44bn (37bn) takeover of Twitter on Friday. He claimed Twitter had not given information about the number of fake and spam accounts on the platform. Now Twitter has asked a Delaware court to order Mr Musk to complete the merger at the agreed $54.20 per Twitter share. "Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, [Mr] 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. The lawsuit went on to accuse Mr Musk of "a long list" of violations of the merger agreement that "have cast a pall over Twitter and its business". BBM208/03 Sept 2022 Page 4 of 5 Twitter chairman Bret Taylor tweeted that the microblogging site wanted "to hold Elon Musk accountable to his contractual obligations". Mr Musk tweeted on Tuesday: "Oh the irony lol [laughing out loud]." The lawsuit said Mr Musk, who is also boss of electric car company Tesla, had backed out of the deal because it "no longer serves his personal interests". The lawsuit said that after Mr Musk agreed to the deal, the stock market fell, along with Tesla shares. "The value of Mr Musk's stake in Tesla, the anchor of his personal wealth, has declined by more than $100bn from its November 2021 peak. So [Mr] Musk wants out," it said. "Rather than bear the cost of the market downturn, as the merger agreement requires, [Mr] Musk wants to shift it to Twitter's stockholders," it added. Twitter's share price has fallen more than 8% in the past month, and in May tumbled from highs of more than $50 per share, as Mr Musk questioned the number of fake and spam accounts on Twitter and said the deal was "temporarily on hold". On Friday, Mr Musk said he was pulling out of the deal, claiming a lack of information about spam accounts and inaccurate representations amounted to a "material adverse event". He also said Twitter sacking executives meant it was not living up to its obligations. In response, Twitter said it planned to pursue legal action to enforce the agreement, saying it was "committed to closing the transaction on the price and terms agreed upon with Mr Musk". The original merger agreement includes a $1bn break-up fee. Twitter calls Elon Musks case against $44bn deal implausible Twitter has accused Elon Musk of creating a new set of excuses to avoid honouring his $44bn agreement to buy the social media company, calling his recently filed objections implausible and contrary to fact. After Twitter sued Musk last month to force the deal through, Musk filed a countersuit last week trying to block the social media companys effort, which is still under seal. A judge has ordered it to be released on Friday. Twitter made public its rebuttals to the Tesla chief executives legal case on Thursday in a court filing shared by Bret Taylor, chair of the social media groups board. In his countersuit, Musk again claimed Twitter has breached the agreement by greatly underestimating the proportion of spam and bots on its platform. The billionaires own analysis estimated the number of bot or spam accounts to be at least 10 per cent of all users. Twitter has previously estimated bots make up less than 5 per cent of accounts. Musk also claimed that Twitter has overstated how many of its users are monetisable, alleging the number of users who actually saw advertising on the service was about 65mn lower than the company represented in regulatory filings. Musk has claimed only about 16mn users were seeing the majority of advertising. Twitter responded by calling Musks estimates factually inaccurate, legally insufficient, and commercially irrelevant. It said the methodology behind Musks estimations was untenable on its face and was not measuring the same thing as Twitter or even using the same data as Twitter. The company questioned the veracity of Musks data, claiming a tool purportedly used to analyse the data had labelled the billionaires own account as a likely bot. Twitter concluded: Musks counterclaims, based as they are on distortion, misrepresentation, and outright deception, change nothing. In addition to the filings, both parties are casting a wide net in seeking additional information regarding the formulation of the deal. Musk has subpoenaed Goldman Sachs and JPMorgan Chase for details on how they advised Twitter, requesting any documents detailing financial performance, discussions with the company about the deal and any analysis of its valuation. Twitter, meanwhile, has served information requests to the banks handling Musks financing of the deal, as well as co-investors and others in the billionaires orbit. As the dispute with Twitter escalates, and heads for a fast-tracked October 17 court date, Musk is also contending with questions from Tesla fans and shareholders regarding his role as chief executive of the electric carmaker. On Thursday, at Teslas annual meeting, Musk addressed several questions related to the Twitter dispute and said he had a good sense of where to point the engineering team at Twitter to make it radically better. Asked what would happen to Tesla were he to leave or split his time, Musk said: I think Tesla would continue to do very well even if I was kidnapped by aliens or went back to my home planet.

Answer questions

1. Based on the case study, discuss the details of Elon Musk and Twitters purchase scandal.