Elon Musk wants to cancel his $44 billion purchase of Twitter. The social media company is pushing for the deal to continue. The result will likely be an extended legal battle in the Delaware Court of Chancery to determine the future of the takeover.
Musk argues that Twitter has a much larger number of bot-controlled spam accounts than the social media company reports. Musk claims the figure could be as high as 20 percent of the site's registrations. Twitter puts the proportion at closer to 5 percent.
Twitter's team has not supplied accurate figures about the number of bot accounts, according to Musk. He argues that not handing over the correct info is grounds for terminating the deal.
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. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
The purchase contract with Twitter includes an agreement where Musk can cancel the deal by paying $1 billion under certain situations. For example, the debt financing he as for Twitter would have to go away.
As of this writing, Twitter's stock is trading at $33.49 per share. Musk's agreement would pay $54.20 a share for a total of $44 billion. The significant difference in value is why Twitter is pushing Musk to complete the deal.
According to reporting from the New York Times, going to court might be a strategy by Musk to get Twitter to the negotiating table in an effort to lower the purchase price. It's also possible for the Delaware court to find that Twitter isn't violating the agreement but not force Musk to buy the social media company. In that case, he would just pay damages.
Musk started his takeover attempt of Twitter in April. His first move was to buy 9.2 percent of the company's stock for $2.89 billion. A few days later, he lined up the deal to purchase the rest of the social media company's stock.
Under Musk's leadership, he doesn't want to ban any user permanently. He also desired giving users the power to edit their tweets and to accept cryptocurrency on the platform.
