Billionaire Elon Musk called off his deal to buy social media company Twitter, according to a filing on Friday with the Securities and Exchange Commission.
Skadden Arps attorney Mike Ringler said in a letter to Twitter’s chief legal officer that “Twitter has not complied with its contractual obligations.” For nearly two months, the company has failed to provide Musk with information about fake or spam accounts, the letter said.
The news sent Twitter stock tumbling 5% in after-hours trading. The stock has fallen sharply since the board accepted Musk’s offer to buy the company in April for $54.20 a share. On the day of the announcement, Twitter closed at $51.70 a share. On Friday, it closed at $36.81.
The billionaire Tesla and SpaceX CEO is almost as known for his polarizing online persona as his entrepreneurial endeavors. He is popular on Twitter, where he chimes in on politics, talks business openly, and embraces the internet’s meme culture. Some of his tweets from him have landed him in legal trouble.
Who is Elon Musk?:What to know about the Tesla CEO who wanted to buy Twitter
Twitter users react
Reaction on Twitter was mixed Friday.
Some made jokes about Musk’s change of plans.
Progressive nonprofit consumer advocacy organization Public Citizen said Musk terminating the deal “is what a win for free speech actually looks like.” Musk in April tweeted “I hope that even my worst critics remain on Twitter because that is what free speech means.”
Attorney Richard Signorelli said he hopes Musk pays a “hefty penalty” to get out of the deal. In another tweet, Signorelli identified himself as a Twitter shareholder and said he is Glad Musk is trying to back out.
Illinois Congressman Chuy Garcia tweeted at the billionaire Friday, telling him “don’t let the door hit you on your way out.” Garcia previously spoke out against the $44 billion deal on Twitter.
One avid Twitter user who has yet to tweet about the letter: Musk.
– Bailey Schulz
GOP reacts: ‘Elon Musk isn’t going to save us’
Conservatives rejoiced in April when Elon Musk made an unsolicited $44 billion bid for Twitter, vowing to restore “free speech” on the social media platform.
The response was more muted late Friday when it became clear that Musk would not be the savior the political right had hoped for.
In a regulatory filing, Musk said he was terminating the Twitter deal over a disagreement about how many spam accounts are on the platform.
Tom Fitton’s take? The conservative activist and president of Judicial Watch said Musk was ditching the Twitter deal because the company refused to disclose details of “its censorship operation.”
Charlie Kirk, founder, and president of the conservative nonprofit Turning Point USA tweeted: “Maybe Elon never intended to buy Twitter at all. Maybe he just wanted to expose it.”
Donald Trump Jr. declared that Musk walking away from the deal meant Twitter was caught lying about spam accounts. “So basically Twitter has a huge amount of spam accounts – way more than they let on – and has gotten busted for it!!!”
“Bottom line,” tweeted Florida GOP congressional candidate Lavern Spicer, “Elon Musk isn’t going to save us.”
Only actor James Woods sounded a more critical note, tweeting: “Musk failed us.” I later deleted the tweet.
It was a far cry from the rousing way conservatives cheered on Musk at the start.
Conservative commentator Dinesh D’Souza began lobbying Musk to buy Twitter in January. His idea of him: That Musk would take over and censor liberals to teach them a lesson on “the imperative of free speech.”
When D’Souza again urged Musk to buy a major social media platform to dramatically shift “the political and cultural landscape,” Musk replied: “interesting ideas.”
Soon Musk was buying up shares of Twitter and being egged on by other conservative figures.
After making a bid for Twitter, the billionaire Tesla CEO picked up millions of followers, many of them conservatives who for years have accused Twitter, Facebook, and Google of anti-conservative bias.
Conservative commentator Brent Bozell, founder, and president of the Media Research Center, tweeted: “Free at last. Free at last. Conservatives may be free at last!”
As of early Friday night, Bozell had not tweeted a reaction to the news that Musk was ending his bid for Twitter.
– Jessica Guynn
Musk deal termination to Twitter ‘disaster’
“Never in a million years would I have imagined this,” said Daniel Ives, senior equity research analyst at Wedbush Securities.
Ives predicts “an uphill battle for Twitter” and “a lot of legal twists and turns.”
“This is a disaster scenario for Twitter and its Board as now the company will battle Musk in an elongated court battle to recover the deal and/or the breakup fee of $1 billion at a minimum,”
Ives said Musk should likely share in some of the blame.
“It’s going to be a black eye for Musk as well,” Ives said. “He doesn’t come out smelling like roses.”
Jennifer Grygiel, a professor at Syracuse University who studies social media extensively, believed from the start that a powerful man like Musk may have had cruel intentions when pursuing Twitter.
“I think it’s fair to say that he understands it’s a powerful communications platform and he used it to wage some political battle,” Grygiel said about Musk. “He felt that his speech from him was threatened and he needed to maintain his power and privilege from him.”
–Terry Collins
Who is Elon Musk?:What to know about the Tesla CEO who wanted to buy Twitter
When did Musk agree to buy Twitter?
Musk’s $44 billion deal was confirmed in late April after Musk spent nearly three months buying up Twitter shares to increase his stake in the company. At the time, the billionaire said he wanted to “make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans.”
– Bailey Schulz
Why isn’t Elon Musk buying Twitter?
In a word, bots. While Twitter has said bots make up just 5% of its monetizable daily active users, the letter says that Twitter appears to be “dramatically understating” the proportion of spam and false accounts. Musk has previously contended that the count is 20% or higher.
– Bailey Schulz
TWITTER BOTS:What are they and how could they mess up Elon Musk’s $44 billion Twitter deal?
How is the Twitter Board responding?
The board plans to sue Musk, according to Bret Taylor, chair of Twitter’s board.
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,” the tweet read .
One former Twitter executive told the Financial Times: “It seems Twitter is willing to go to war to make this deal happen.”
In its latest quarterly report, Twitter warned that its financial condition “may suffer” if the merger does not close. Tumbling stock prices, low investor confidence, stockholder lawsuits, and business disruptions were just a few of the possibilities the company laid out.
– Terry Collins and Bailey Schulz
Can Musk walk away?
According to a document filed with the SEC on April 25, Musk would be on the hook for $1 billion if he terminates the deal.
“And who says he’s still not trying to acquire it?” Grygiel said. “We’re still very much in a limbo period and we have to wait and see where this all ends up.”
– Bailey Schulz and Terry Collins
www.usatoday.com
George is Digismak’s reported cum editor with 13 years of experience in Journalism