Elon Musk has now canceled the Twitter takeover. The company wants to sue the richest man in the world because of it.
Normally you can, for example, return something you have bought – within a certain period of time. Elon Musk probably thought so too. After agreeing on a takeover with Twitter in spring 2022, the Tesla boss and richest man in the world does not seem to want to buy the social network after all. Twitter could now sue him for this – and apparently intends to do so. That could be very expensive for Elon Musk.
Twitter takeover collapsed because of Elon Musk
Actually, since April 2022, there has been an agreement between Elon Musk and Twitter that the billionaire will buy the network for 44 billion US dollars. Since then, detailed negotiations have been going on. On Friday, July 8, 2022, however, Musk’s lawyers submitted a document to the US Securities and Exchange Commission, with which the Tesla boss officially resigned from the purchase. The main reason mentioned: Twitter said the number of so-called spam bots on its own platform was too low. This refers to user accounts that automatically spread propaganda, for example. So Musk and his team are assuming Twitter actually has fewer real users than they admit. Industry experts had already seen this argument put forward by Musk in the past few weeks as a tool to push down the purchase price.
The fact that Elon Musk now wants to call off the Twitter takeover completely does not come as a complete surprise, as he has already hinted at this several times. Twitter had also clearly formulated these hints that they wanted to take legal action. Chairman of the board Bret Taylor has now announced that it would probably come to that. Twitter is also confident of winning this legal dispute.
Also interesting: Elon Musk has only played one console game in his life
Failed takeover could be expensive for Musk
The case is likely to end up before the Delaware court. Due to the favorable tax situation, the small state is home to many large companies, including Facebook, Google and Apple. In the room is a penalty of 1 billion US dollars. That shouldn’t hurt Musk much. However, it’s equally possible that the court will rule that he is obligated to buy Twitter. Then the agreed 44 billion US dollars are due. So far, Elon Musk has avoided the questions about Twitter. In addition to the accusation of numerous spam bots, which Twitter understates, there is also a lack of transparency. However, there is no evidence that Twitter withheld information from Elon Musk and his team.
Incidentally, Musk’s takeover of Twitter hasn’t necessarily had a positive impact on the company. Since April 2022 and thus the announcement of the takeover, Twitter shares have lost more than a quarter of their value, and the situation is similar with Tesla.
Fun fact: Twitter is working with the same law firm that advised Elon Musk and Tesla in 2018 on its lawsuit. At that time, Musk had announced that he would take Tesla private; it didn’t come to that in the end. However, he was accused of market manipulation by the SEC and had to pay a $20 million fine.