Elon Musk gives up on acquiring Twitter.
©Britta Pedersen / POOL / AFP
Too many fake accounts?
Elon Musk, the boss of Tesla and SpaceX, told Twitter on Friday that he was ending the agreement with the board of directors to buy the social network. This choice would be linked to “false and misleading” information about the company.
Elon Musk gives up on acquiring Twitter. In a letter published by the American stock market policeman, the lawyers of the boss of Tesla ensure that Twitter has not respected its commitments made in the agreement, by not giving all the information requested on the number of fake accounts and spam.
After the billionaire’s announcement, Twitter announced legal action.
Twitter has repeatedly said in recent weeks that the number of fake accounts on its platform is less than 5%. Elon Musk and his team believe that the network is lying, and that this affects the viability of his business, and therefore the value of the company.
By ending his commitment to buy Twitter, the businessman exposes himself to substantial legal proceedings. Both parties have pledged to pay severance pay of up to $1 billion in certain circumstances.
Elon Musk has flip-flopped and terminated the deal to buy Twitter for $44 billion.
The other reason could be that Elon Musk finally had “remorse”, as analyst Angelo Zino of CFRA Research told AFP. The contract signed by the billionaire in April provided for a buyback price at a price of 54.20 dollars per share, but the price of the title has fallen by 20% since that date. In other words, Elon Musk would buy Twitter for far too much compared to what it is currently worth.
If Elon Musk manages to prove that the fake accounts are indeed as numerous as he claims and that this hides a less favorable economic situation than expected, he can then withdraw without incident.
Justice will determine whether or not this is enough for Elon Musk to withdraw from the takeover.