Social media battle
Twitter sues Musk for terminating $44bn takeover
Twitter is suing billionaire Elon Musk over his decision to walk away from his $44 billion takeover bid, stating it expects him to honour the terms of the deal.
The suit, filed in Delaware Chancery Court, follows Musk’s decision last Friday to pull out after alleging the social media company had not provided the necessary data and information he needed, particularly on fake accounts.
Twitter is insisting he complete the deal on the agreed terms of $54.20 per Twitter share, according to a court filing.
A lawsuit states: “Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, 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.”
Shares in the social media platform have tumbled to $34.06 from above $50 when the deal was accepted by Twitter’s board in late April.
John Colley, associate dean at Warwick Business School and former MD of a FTSE 100 company with experience and expertise in mergers and acquisitions, said: “Fake accounts have always been an issue for Twitter, but they didn’t dissuade Elon Musk from launching his bid. Bringing it up when he did seemed to be little more that an excuse to withdraw gracefully.
“The offer was too expensive in the first place and seems even more so now, given the fall in technology markets and the amount of risk involved in trying to turn Twitter around and break even. The collapse in Tesla’s share price following the original offer showed what investors thought of it.
“Musk’s choice to conduct negotiations publicly, with the whole thing played out on social media, complicated things further and meant lawsuits were always a likely outcome.
“It just goes that even one of the richest people in the world cannot do and say whatever he wants with no repercussions. This bid could become a very costly mistake for Elon Musk.”