World richest man and Twitter user Elon Musk has withdrawn his US$44 billion (RM195 billion) bid to buy social media platform Twitter.
Musk accused Twitter of breaching multiple provisions of the merger agreement. Twitter however said it would pursue legal action to enforce the deal.
In a filing to the Security and Exchange Commission (SEC) on Jul. 8, 2022, Musk’s lawyers said that Twitter had failed or refused to provide information on fake or spam accounts on the platform, which is “fundamental” to its business and financial performance.
“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” the filing stated.
The filing also said that Twitter had fired two key, high-ranking employees, laid off a third of its talent acquisition team, and instituted a general hiring freeze without Musk’s consent, therefore breaching its obligation to “preserve substantially intact the material components of its current business organisation”.
Twitter planning to pursue legal action
Twitter’s chairman, Bret Taylor, has responded to Musk’s decision to pull out of his bid.
In a tweet on July 9, 2022, Taylor said that the Twitter Board is planning to pursue legal action to enforce the merger agreement.
“We are confident we will prevail in the Delaware Court of Chancery,” he added.
The memo urged Twitter employees to refrain from tweeting or sharing any commentary about the merger agreement as it is an “ongoing legal matter”.
Musk and Twitter’s rocky relationship
Musk’s decision to terminate his bid may not come as a surprise given his rocky relationship with Twitter over the past few months.
The billionaire first showed interest in Twitter in January 2022, when he quietly bought Twitter shares and steadily increased his stake.
Months later, on April 21, Musk struck a US$46.5 billion deal to buy the social media platform. Twitter announced a few days later that it agreed to sell itself to Musk for US$44 billion. Since then, however, Musk’s relationship with Twitter gradually turned sour.
In May 2022, Musk said that his deal with Twitter was “temporarily on hold” as he did not receive any information that proves spam or fake accounts represent less than five per cent of users on Twitter.
He then decided to investigate the issue on his own by getting his team to “do a random sample of 100 followers of @twitter”.
Musk later explained in a subsequent tweet that he picked 100 as the sample size number as “that is what Twitter uses to calculate <5% fake/spam/duplicate”.
The next day, Musk tweeted: “Twitter legal just called to complain that I violated their NDA by revealing the bot check sample size is 100!”
A few days later, Twitter CEO Parag Agrawal shared a lengthy Twitter thread about spam accounts.
One of Agrawal’s tweet appeared to have gotten under Musk’s skin as he responded with a poop emoji.