Elon Musk once again has created a controversy and this time it has gotten out of hand. Tesla CEO is backing out of the Twitter deal that he himself initiated. Apparently, Musk was trying his best to see the deal through but it didn’t happen.
The business mogul was ready to spend a huge amount of $44b for the takeover but there was some power tussle between him and Twitter management. And now finally, Musk has decided to terminate the deal. But why this decision was taken after a long tug of war? Here’s what we know.
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Why Did Elon Musk Terminate The Twitter Deal?
The doubts regarding Musk’s Twitter deal started when he raised the issue of misinformation over fake accounts on the platform but still remain onboard. Finally yesterday, the Elon Musk confirmed that he is dropping the deal with Twitter Inc. He said the social media company had failed to provide information about fake accounts on the platform.
In a filing to US Securities and Exchange Commission (SEC), Musk’s lawyers declared that Twitter had failed or refused to respond to multiple requests for information on fake or spam accounts on the platform, which is fundamental to the company’s business performance.
“Musk is terminating the merger agreement because Twitter is in material breach of multiple provisions of that agreement, appears to have made false and misleading representations upon which Musk relied when entering into the merger agreement, and is likely to suffer a Company Material Adverse Effect,” stated the filing.
Twitter Plans To Force Musk To Go Ahead With The Deal
Although the business tycoon has declared the cancellation of the deal, Twitter does not seem to be ready to let it go so easily. Twitter chairman Bret Taylor announced that there will be proper legal action against Musk to enforce the deal.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” said Taylor.
As per the details of the agreement, Elon Musk has to pay $1 billion as a break-up penalty if the deal does not sail through for reasons including the acquisition financing falling through or regulators blocking the deal. The break-up fee would not be applicable if Musk terminates the deal on his own, Reuters said in a report.
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