Elon Musk stopped buying Twitter, something that has already lit red lights in the company. the board of directors submitted a preliminary proxy statement to the Securities and Exchange Commission (SEC). According to the press release, the document contains important information, including the background and reasons for Twitter’s transaction with Elon Musk.
“Twitter is committed to completing the transaction at the agreed price and terms as soon as possible,” the statement said. As reported CNNTwitter’s board will enforce the merger agreement.
The Board and Mr. Musk agreed to a transaction at $54.20 per share. We believe that this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement.
The above means that If Elon Musk repents, he will have to pay a $1 billion fine and could face a lawsuit for damages.. According to an expert mergers and acquisitions lawyer, the penalty for not fulfilling the contract does not consider a buyer’s regret.
If Musk can’t get the money or there is regulatory brokerage, he would pay the money and end of story. Retracting because the initial offer was too high is not valid, so Elon has been looking for a reason to renegotiate the offer.: spam bots.
Spam accounts, a strategy by Elon Musk to buy Twitter at a lower price
A few days ago, Musk suspended the operation waiting for Twitter to confirm that fake accounts represent less than 5% of its users. Elon does not believe in this figure and challenged the social network to deny it. Parag Agrawal, CEO of Twitter, tried to calm things down by saying that they suspend “more than half a million spam accounts every day”.
Agrawal said that over the past year, the percentage of fake accounts has remained below 5%, although it is impossible to verify it. “Unfortunately, we do not believe that this specific estimate can be done externally, given the critical need to use both public and private information (which we cannot share),” mentioned in a tweet.
Elon Musk thinks that fake accounts represent 20% of all users and does not rule out renegotiating the purchase. The tycoon confirmed at a technology conference that a new offer at a different price is not out of the question. “The more questions I ask, the more my worries grow,” she said. Because Twitter is unable to check the percentage of spam accounts, Musk would have a chance to change the conditions and make a lower offer.
The outlook for Twitter is not encouraging. After the suspension of the operation was announced, the shares plummeted and the company lost $9 billion in market value. The exodus of key personnel and the poor management of the situation by its managers show that the company is in free fall.
The best option for the social network would be to renegotiate with Musk. If the tycoon changes his mind and cancels the deal, Twitter could sue him, although it would be a long and expensive process.