The multi-billionaire tech giant Elon Musk and Twitter, a microblogging social media website, are stuck in a trial battle after Musk backed out from the offer to buy Twitter.
Elon Musk is an American entrepreneur who cofounded six companies, including the electronic-payment firm PayPal, electric automobile maker Tesla, rocket producer SpaceX, and Boring Company, a tunneling venture. He is one of the visionary persons acknowledged by the New York Times as "arguably the most important and successful entrepreneur." His objective is to improve the state of the globe.
On the other hand, Twitter is a social networking microblogging website owned by the American corporation Twitter, Inc. Tweets are the messages and posts on the site. People primarily used it to express their opinions or remarks via tweets on various worldwide situations (political, social, or economic). It is a well-known platform for intellectual freedom.
What is the deal?
In April 2022, tech titan Musk announced his intention to acquire Twitter for $54.20 per share. This puts the company's valuation at $44 billion, making it one of the biggest leveraged buyouts ever.
Musk said in a letter to Twitter's chair that he would "unlock" Twitter's "extraordinary potential" to be "the platform for free speech throughout the world."
Some of the potential changes to the site, which he has considered doing after taking over Twitter are:
• Reshuffling the present management and introducing an edit option to tweets;
• weakening the present content control method, including provision for temporary suspensions rather than outright bans; and
• perhaps transitioning to a 'freemium' model akin to Spotify's, in which users may pay to avoid more intrusive adverts.
The Twitter board accepted the bid made by Musk. When Musk revealed a 9.1% share and threatened to take over Twitter in April 2022, they decided to sell the company to him for $44 billion.
Why withdraw from the deal?
The co-founder of Tesla pulled out of the agreement shortly after the board approved it by canceling his $44 billion offer to acquire Twitter. He asserted that the social media business was negligent in not disclosing details regarding fake accounts on the platform.
This announcement impacted the Twitter stock market, as shares dropped 6% to $34.58 in extended trade. When Musk made his $54.20 bid to purchase the dominant social media company on April 25, the price had soared to $51.70.
Musk's argument is based on the claim that Twitter misrepresented how it assesses the number of spam-bot accounts that are useless to advertisers. Bots are automated accounts, and their usage may cause overestimations of the number of authentic users, which is crucial for determining advertising prices and the service's overall worth. Reuters
On this withdrawal, Twitter sued Musk for backing out from the deal, and in October, both parties went to court.
What are the claims from both parties:
As reported by New York Post, the following was said in a filing by Musk's attorney, “Twitter has 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.”
Twitter’s chairman Bret Taylor responded by stating that the company is ready to sue Musk.
“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,” Taylor tweeted Friday afternoon. “We are confident we will prevail in the Delaware Court of Chancery.”
Musk claims that he informed Twitter that failing to provide them with all the information they need would violate the merger agreement. However, he confirmed that Twitter shared some information with them, but not as much as it does with its largest advertiser.
According to New York Post, Twitter granted Musk access to its "firehose," a database of unprocessed information on hundreds of millions of daily tweets. Musk must pay a $1 billion break-up fee under the terms of the agreement if he does not complete the transaction.
The tech billionaire and the 16-year-old San Francisco-based corporation engaged in a prolonged legal battle as a result of the decision.
Experts believed that Musk’s attempt to back out of the transaction was because he has to pay a hefty premium for the company as a consequence of the tech stock correction.
The deal restored by Musk:
Musk is expected to revert to the April offer to acquire the firm for $44 billion, signaling an end to a contentious legal battle that was set to go to trial. This agreement comes after a months-long tussle between the two parties.
After facing some legal challenges, Musk decided to reverse the deal. According to Reuters, Musk wrote to Twitter on Monday (October 3) that if Twitter dropped its lawsuit against him, he would alter the direction and honor his April deal to acquire the business for $54.20 per share.
A handful of risks and missteps taken by Musk make his hand seem weak in the trial, which is set to begin in Delaware Chancery Court in less than two weeks.
What happens to Twitter after the deal?
After the reversal of the deal made by Musk, Musk announced to purchase of Twitter and turned the platform into an “everything app.” He tweeted on Tuesday, “Buying Twitter is an accelerant to creating X, the everything app.”
Everything app is a concept of an all-in-one app that includes social media, payment services, food delivery, text messaging, gaming, and video conferencing. Like the WeChat in China, Grab in Singapore, and PayTM in India.
He also intended to improve the conversation by removing bots and making Twitter the world’s "digital town square.” This leads to his previous commitment to provide a platform for free speech.
What is the Future of Twitter?
Twitter says it plans to conclude the purchase at the agreed-upon price. They have already gained shareholder approval for the sale to Musk. The deal might be concluded shortly if the two parties agree on the original terms.
However, the two parties are scheduled for a trial in Delaware on October 17 over Musk's prior attempts to cancel the agreement.
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