Musk Warns of Contract Termination on Twitter... Withdrawal of Acquisition or Renegotiation Strategy? (Comprehensive)

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Seulgina Jo] ‘Is it sincerity or a negotiation strategy?’ Elon Musk, the world’s richest person and CEO of Tesla, has threatened to withdraw from the much-anticipated ‘Twitter acquisition’ deal.

On the 6th (local time), according to the Wall Street Journal (WSJ) and others, Musk’s legal representative, attorney Mike Ringler, sent a letter to Vijaya Gadde, Twitter’s Chief Legal Officer (CLO), conveying this message.

Attorney Ringler pointed out that Twitter had not provided data on spam bots and fake accounts, mentioning the possibility of contract termination. He argued, “Since Twitter has violated its contractual obligations, Musk CEO will have all rights, including terminating the acquisition agreement.”

Last month, Musk also stated that the deal could not proceed unless Twitter proved that the proportion of fake accounts was below 5%. He has claimed that the number of fake accounts is at least 20%, four times Twitter’s estimate, and insisted on verifying this before the acquisition.

Some analysts suggest that the fake account issue is just an excuse and a strategy to renegotiate the acquisition price. On this day, Twitter’s stock closed at $39.56, down 1.49% from the previous session on the New York Stock Exchange. This is far below Musk’s offer price of $54.20 per share. Since officially announcing the acquisition plan in April, both Twitter’s and Tesla’s stock prices have continued to decline, which is believed to be a factor behind Musk’s change of heart.

Currently, the market is considering the possibility that Musk may actually abandon the Twitter acquisition. The fact that he publicly raised this issue is seen as a pressure tactic to break the contract. Ann Lipton, a corporate governance professor at Tulane Law School, said, “It’s a clever attempt to get out of the acquisition agreement,” adding, “If the information Twitter did not share was a request necessary for Musk CEO’s financing, then the acquisition contract could be terminated.”

However, withdrawal is expected to be far from easy. There will be a $1 billion penalty and inevitable related lawsuits afterward. Twitter rebutted in a statement that day, saying, “We are actively sharing information according to the terms of the merger agreement.” The New York Times (NYT) reported that Twitter’s management reaffirmed to employees their commitment to completing Musk CEO’s acquisition deal.

This content was produced with the assistance of AI translation services.