The world’s richest man Elon Musk, who had earlier threatened to end $44 billion twitter deal, finally backed out from taking over the company over its failure to provide the data requested on spam and fake accounts. The dramatic saga that witnessed hostile takeover threats followed by criticism and suggestion for the social media platform seems to have ended with Musk abandoning the acquisition plan. "Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," Musk had said earlier.
Why Elon Musk backed out
In a letter sent to Twitter by Musk lawyer Mike Ringler read as per CNET report, “This information is fundamental to Twitter's business and financial performance." The letter also pointed out that Twitter "appears to have made false and misleading representations."
It also revealed that other information Musk says Twitter hasn't handed over, included the company's financial conditions and details about how Twitter calculates daily users who can see ads. Even as Twitter has provided Musk with some data, it calls the information "minimally useful." Based on the early analysis Musk alleges some of Twitter's public disclosures of daily users are "either false or materially misleading."
The letter further alleges Twitter of breaching another part of the agreement that said the company had to seek and obtain consent before straying from "its obligation to conduct its business in the ordinary course," after the company fired key executives, laid off staff and also froze hiring.
Know the twist and turns of the Twitter Saga
- In January this year, Musk started to tap into Twitter shares quietly building his stake in the social networking site. Musk's stake in Twitter raised to 5 per cent but that fact is not disclosed until March. Musk was obligated to divulge details about his stake within 10 days of crossing the 5 per cent threshold, but waited 21 days to do so.
- Musk turns out to be Twitter's largest individual shareholder, with a more than 9 per cent stake in the company. Twitter announces Musk will join Twitter's board of directors. Later, Musk says he will not join Twitter’s board
- Instead, Musk porposed a takeover bid to acquire the remaining shares of Twitter. The world’s richest man offers $54.20 a share, a 38 per cent premium to 1 April closing price
- Twitter adopts poison pill to protect company from takeover in next session
- By April end, Musk lines up $46.5 billion in financing to buy Twitter putting the board under pressure to negotiate.
- Musk forges a deal to buy Twitter for $44 billion and take the company private. The billionaire had then said he wanted to own and privatize Twitter because he thinks it's not living up to its potential as a platform for free speech.
- In order to fund the deal, Musk sells roughly $8.5 billion worth of shares in Tesla, according to regulatory filings.
- He also secured more than $7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.
- In May, Musk said that his plan to buy Twitter is "temporarily on hold". Musk said that he needs to pinpoint the number of spam and fake accounts on the social media platform.