Twitter Sale Trial Set for October as Musk Holds Firm on Exiting the Deal

 

Tesla CEO Elon Musk has backed out of his deal to buy Twitter for $44 billion, claiming that the site has more bots and fake accounts than was initially disclosed to him. Twitter threatened court action and the breach of this deal has led them to requesting an expedited trial date, which has now been set for October 17. Twitter pushed to have a trial date over Musk’s attempted exit set in a timely fashion as it’s been harming business operations and Twitter’s stock value.

The big uncertainty now is whether Musk’s claims will hold up in a judicial setting.

“You do not have to complete a purchase if false information was provided to you as part of your waiving of diligence,” said Daniel Newman, Founding Partner and Principal Analyst of Futurum Research. “Meaning you are basically making a buying decision based upon the information that you had reviewed being accurate.”

Both Twitter and Musk think their side is valid; does either side have more of a leg to stand on in court? Twitter claimed that spam accounts on the site are less than 5% of total users after their extensive research but Musk suggested the number is closer to 20% bots.

“What started to become evident in his diligence process was that the data was likely either falsified, which creates issues of potential fraud,” said Newman. “Or it was negligence and ignorance among the tech leadership within Twitter that was allowing the company to continue publishing bad data.”

Newman explained that Musk’s access to his own account statistics could be enough to validate his arguments; he is one of the most followed users on Twitter totaling 101.9 million followers, and the most followed CEO on the platform. If Musk runs an internal audit of his follower count, he could find a microcosm example of a higher concentration of bots on the platform than Twitter’s official 5%. However, Musk might still have to pay a $1 billion breakup fee unless he can prove the company falsified their value and bot users. Twitter still has a strong case in the legal battle as well because of the specifics of the merger agreement signed for the purchase. Still, Newman sees an easier resolution to this dispute.

“You’ve got a company that’s sort of limped along for a long time, providing data that it’s not evident that it is accurate. All [Musk] wants is an audit. If I was solving this I would make it real simple. They set a threshold, they audit the data, if the data is audited and the bot presence is less than X percent, he’s basically accountable to buy the company. If it’s greater than Y percent, he’s off the hook. And to me it’s almost that simple,” Newman said. “It won’t be…this will be dragged on and the lawyers will find loopholes to sue.”

On July 11, Twitter shares dropped 11.3%, coming to $32.65/share with the news that Musk is not going through with the deal. This price is about 40% below the deal price Musk was offering to pay. Executives at Twitter are caught in a limbo period, oscillating between maintaining Twitter as a publicly-traded company or taking on their self-proclaimed “lame duck” role, as CEO Parag Agrawal called it, amid a Musk buyout. Agrawal announced spending cuts and a hiring freeze back in May until the deal with Musk has been closed.

Follow us on social media for the latest updates in B2B!

Image

Latest

CtUC 2023 Trailblazers
CtUC 2023 Trailblazers Transform Hospital Operations Through Medical Logistics Innovations
May 21, 2024

CtUC 2023 Trailblazers are at the forefront of transforming hospital operations, particularly in sterile processing and logistics, as highlighted in a recent episode of the ConCensis podcast. The healthcare industry, driven by technological advancements and the need to improve patient outcomes, continuously seeks solutions to optimize processes and ensure compliance with health regulations—a challenge…

Read More
motor fuels audit tips
Motor Fuels Tax Minute – Episode 48: Audit Tips
May 21, 2024

In this week’s episode of Motor Fuels Tax Minute, our hosts introduce Supervisor and Motor Fuels team member, Bryan Ruwaldt, who offers audit tips.   For information or assistance, contact us. We are here to help. ©2024 Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 48 00:00:00 Kelly: Thank you for joining us on this…

Read More
facilities
Learning, Sharing, and Harmonizing with Communities are Central to the Success of Applied Digital’s Facilities
May 20, 2024

Nick Phillips, the EVP of Hosting Operations and Public Affairs at Applied Digital emphasizes the importance of learning and understanding the unique needs and resources of each community they engage with and build their facilities. Their approach is to identify what the community can offer and what they can contribute in return. This process…

Read More
gpu deployment
Applied Digital is Scaling Up Infrastructure to Handle Growing GPU Deployment Needs
May 20, 2024

During a transformative period, Applied Digital experienced a significant increase in demand for large-scale GPU deployment. This demand required a focus on power density, as the networking within data centers, particularly for InfiniBand, necessitated that servers be located close together. Each server consumed 10.2 kilowatts of power, and the optimal performance was achieved when…

Read More