InvestorQ : Is it true that Musk is walking out of Twitter deal and what could be the consequences?
vaishnavi mhatre made post

Is it true that Musk is walking out of Twitter deal and what could be the consequences?

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vidhya Laxmi answered.
1 month ago
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Elon Musk has now officially decided that he will walk away from the $44 billion Twitter deal. His argument is that Twitter had more spam accounts than it disclosed; in fact they were 30% as against the claim of 5%; that is 5 times higher. Musk is also unhappy with the limited information shared with him on the BOT usage. Musk had looked at Twitter as a captive social media property but that was not to be due to the fake accounts. Musk was already paying top dollars for a platform where revenue model was always dubious.

Musk’s lawyers argued that Twitter underrepresented the number of spam accounts on the platform and hence constitutes company material adverse effect. Musk is also tending to the view that Twitter may not be worth $44 billion offered. However, legal experts doubt if failure to provide additional information can be a ground for repudiating the agreement as long as Twitter shared reasonable amount of information. On the other hand, Twitter will pursue legal action to enforce the agreement and also see an order from court.

It could end up in one of the 3 options. The deal may be mutually called off with Musk paying a break-up fee to Twitter. Secondly, both may mutually settle for a lower valuation and the deal may go ahead. That sounds unlikely. The third option is that Twitter furnishes the additional data to Twitter and goes ahead.

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