August 9, 2022

Image credit: Yahoo Finance

Twitter shares fall as Elon Musk backs out of deal

Twitter shares fell on Monday as Elon Musk announced he was abandoning a $44 billion (£36 billion) offer to buy the social media platform.

After complaining that Twitter had not supplied enough information regarding the number of spam and phoney accounts that were available on the network, Mr. Musk withdrew.

Twitter has retained a premier US law firm and wants to file a lawsuit to force the purchase through.

In a tweet, Mr. Musk stated that Twitter would have to “disclose bot information” in court.

The share price of Twitter was approximately $32.64 as of the close of trade on Monday; this was a further decrease from the takeover price of $54.20 per share that Elon Musk and Twitter’s board had agreed upon in April.

Investors can respond to Mr. Musk’s declaration on Friday that he intends to withdraw from the deal for the first time.

Elon Musk, the CEO of Tesla, first hinted at plans to buy Twitter in April. However, the deal was abandoned a month later due to worries about the prevalence of phoney accounts on the site.

The original merger agreement calls for a $1 billion (£830 million) break-up fee, but Twitter wants Elon Musk to compete for the deal rather than insisting that he pay the cash.

One of the top corporate law firms in the world, Wachtell Lipton Rosen & Katz in New York, has been hired by Twitter.

Shares in Mr. Musk’s electric vehicle company, Tesla, plummeted by almost 20% after he initially agreed to buy Twitter in April. There was subsequently talk that Mr. Musk might use the approximately £6.8 billion raised to help finance the transaction.

Mr. Musk is the founder of the rocket company SpaceX, in addition to being the CEO of Tesla. He had pledged, as a self-described “free speech absolutist,” to ease Twitter’s content restrictions as soon as he bought the company.

He has long criticised Twitter for blocking several accounts, including the one belonging to former US President Donald Trump.

Furthermore, Mr. Musk has called for more transparency in the system that allows some tweets to be promoted and distributed to bigger audiences on the platform.