The company’s stock fell 11.3% on the New York Stock Exchange to end at 32.65 US dollars, 40% less than what the entrepreneur had offered when he announced his intention to get their hands on Twitter in mid-April.
But after several months of procrastination and more or less direct threats, Mr. Musk said in a letter to Twitter on Friday that he was terminating this agreement.
The company, he believes, failed to live up to its commitments by not disclosing enough information about fake accounts and spam, and by minimizing their number.
To justify his renunciation, Mr. Musk also invokes several recent decisions by Twitter such as the hiring freeze, contrary, according to him, to the obligation for the company to continue to operate normally.
False, Twitter’s lawyers officially replied in a letter sent Sunday to Mr. Musk and his legal representatives, and published Monday evening on the site of the American authority of the financial markets.
Contrary to your letter’s assertions, Twitter did not breach any of the obligations under the agreement.they write.
The social network therefore demands that the multi-billionaire keep its commitments.
Twitter claims in particular to have transmitted the information requested by Mr. Musk on the number of inauthentic accounts on its platform, which he claims to be less than 5% while the multi-billionaire estimates it to be much higher.
The reasons put forward by the entrepreneur do not legally justify a breach of contract, argue several specialists.
The two camps are therefore now engaged in a legal tussle, which could cost Mr. Musk several billion dollars if he were to lose.
Earlier in the day, Mr. Musk had conveyed his first reaction on Twitter on Monday since the announcement of his withdrawal by posting a image (New window) containing four photos where he appears hilarious.
They said I couldn’t buy Twitter. Then they refused to reveal the fake account information. Now they want to force me to take over Twitter in court. Now they are forced to reveal fake account informationcan we read next to each shot.
A risk to the reputation of Twitter
According to Dan Ives of Wedbush Securities, Game Of Thrones to salvage the transaction or recover at least the $1 billion in severance pay”,”text”:”This is \”extremely dangerous\” situation for Twitter and its board at the moment where the company will take on Musk in a Game of Thrones-style legal battle to save the deal or at least recover the billion-dollar severance pay”}}”>This is a situation of “extreme danger” for Twitter and its board of directors as the company faces Musk in a legal battle worthy of Game Of Thrones to salvage the deal or recover at least the $1 billion severance payouts.
We do not see any other outstanding bidders at this time as the legal proceedings are about to begin in court.adds the analyst.
Morningstar analyst Ali Mogharabi, however, believes that at the level the stock is currently trading,
other parties may be interested in Twitter. There is still the scenario that Elon Musk would eventually buy the group, but at a lower renegotiated price, he adds in a note.
Without going into the outcome of the legal battle, analysts from the rating agency S&P Global Ratings note that, in any case, this
increases uncertainty and reputational risks of the platform.
The slowdown in economic growth was to
significantly affect advertising revenue of Twitter, which constitute approximately 90% of its turnover, they also advance.
They plan to lower Twitter’s rating by one or more notches if the transaction is confirmed at the original price or if it is canceled. On the other hand, they could decide to leave it at its current level if the two parties reach an agreement and that the reputation of the social network, both with its users and advertisers, is not too damaged.