New York Elon Musk has sent another cancellation letter to cancel the Twitter acquisition. Facts had come to light that provided an additional and clear basis for terminating the takeover, Musk’s lawyers said on Tuesday. These were known to Twitter before the first cancellation of the $ 44 billion takeover, but were not published.
Twitter shares fell almost three percent to $ 38.99 in pre-market US trading on Tuesday, further moving away from the Tesla CEO’s original offer price of $ 54.20
In the event that the first letter of termination dated July 8 was considered invalid, an additional letter of termination was sent, Musk said. According to a court filing on Monday, Musk obtained information from the former head of security of Twitter about the collection of spam accounts.
Peiter Zatko, the former head of security, accuses Twitter of falsely claiming to have a solid security plan and prioritizing user growth over reducing spam.
Musk announced in April that he would take over Twitter for around $ 44 billion and then canceled the purchase in July with reference to false statements about the number of fake accounts on the platform. In addition, he also did not want to pay the pre-agreed dissolution fee in the amount of one billion dollars.
The US short message service has sued Musk and wants to enforce that Musk completes the acquisition at the agreed price. The trial is scheduled to begin on October 17 in the US state of Delaware. Twitter accuses Musk of sabotaging the deal because it no longer serves his interests.
According to Wedbush analyst Dan Ives, the whistleblower’s statements make the Twitter case “more complicated”. All eyes are now on the proceedings in Delaware, he wrote on Tuesday. Both legal teams were preparing for an “unprecedented battle over the $44 billion Twitter deal.” Zatko’s statement could give Musk a much-needed little victory.“
Musk’s legal team has subpoenaed Zatko to testify in Delaware court on September 9. “Importantly, Zatko claims that Twitter does not have an accurate count of the number of spam and fake bot accounts on its platform. This will be in the foreground for the Musk team,“ says analyst Ives. In particular, the timing of the Zatko statement plays into Musk’s cards.
There are a number of possible outcomes of the process, including a settlement, a billion-dollar separation fee to be paid by Musk, a forced deal and a variety of other outcomes, according to Ives. “For now, Twitter shares will continue to trade with deal opportunities as the long and ugly legal battle now plays out in the Delaware courts.“
One likely scenario is that Musk settles with Twitter out of court and buys the platform at a lower, renegotiated price in the range of $ 50, the analyst believes.