Elon Musk threatens to back out of Twitter deal

In yet another turn in the ‘Elon Musk saga’ of acquiring Twitter, the Tesla CEO has threatened to walk away from the deal. The threat came in the form of a letter from Musk’s lawyer to Twitter’s legal division, CNN reported

While Musk had been making the moves on acquiring a stake in Twitter since January this year, he hasn’t totally made up his mind about completing the buyout of the company. Musk has claimed that he views the platform as a town square of the internet, and the economics of running it does not bother him. However, Musk has threatened to withdraw from his offer due to money matters. 

Musk’s best and final offer

Two months ago, when Musk offered to buy out Twitter and take it private, he made it crystal clear that he was not there to negotiate a price for the platform with the Executive Board and his $54.20 a share was his best and final offer. While this price was a premium from Twitter’s prevailing price at that point, it was also far away off from Twitter stock’s high of $70 earlier this year. 

Musk, who by then had amassed close to ten percent of the Twitter stock, also included a veiled threat that he would offload his holdings if the Board rejected his offer. This was bound to trigger a slide in Twitter stock price, but Musk did not mind harming the company’s market position if he did not have his way. 

With few options available, the Twitter board accepted Musk’s offer. However, the sequences of events have strongly suggested that Musk is looking for a discount on his ‘final price’. He also has little to lose if he walks away from the deal.

Is Elon Musk walking away from Twitter? 

Since his buyout offer, Musk has been raging about spam and fake accounts on the social media platform and has vowed to fight tooth and nail against them. He has also accused the company of not doing enough to stop these accounts, even after the current CEO, Parag Aggarwal tried to publicly explain how sophisticated the operations of fake accounts were on the platform.  

Musk had previously put the deal temporarily on hold due to the mismatch of fake account numbers that the company claims and which actually exist on the platform. Calling them critical to the financial health of Twitter,  Musk has now formally threatened to walk from the deal since the company is not providing him the data he has been seeking.

Musk has requested the methodology used by the company to consistently claim that its fake account numbers are less than 5 percent of the active users on the platform. Whether Musk is using this as a bargaining chip or actually walking away is still not clear.

CNN also reported that Musk had waived off a due diligence clause in the deal that could have made it easier for him to walk away. However, Musk thinks that Twitter’s disclosures are fraudulent, and he does not have to accept them even if he waives off due diligence.

On its part, Twitter has said that it will continue to cooperate with Musk and share information as long as it is part of their merger agreement and enforce the agreement at the agreed price and terms, CNN reported. 

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