Elon Musk wants out of the Twitter deal. It could end up costing at least $1 billion
AILSA CHANG, HOST:
Well, it turns out Elon Musk says he does not want to buy Twitter after all. The billionaire has written a letter to the social media company, accusing it of not being upfront about the amount of fake and spam accounts, or bots, on the platform. He says the company has refused to give him the information that he says he needs. But can he really scuttle the $44 billion deal?
Well, to help us answer that question, we're joined now by NPR tech correspondent Shannon Bond. Hi, Shannon.
SHANNON BOND, BYLINE: Hi, Ailsa.
CHANG: OK. So what exactly did Elon Musk say in this letter to Twitter today?
BOND: Well, he accused Twitter of making, quote, "false and misleading representations." And what he's referring to is this ongoing dispute you mentioned that he's had with the company over fake accounts. So Twitter has long said that less than 5% of accounts on the platform are fake or spam. But Musk thinks that number is much higher, and he says Twitter has refused to give him the data and information that he says he needs to verify the company's estimates. And so in this letter today, he says this is grounds for calling the whole thing off.
CHANG: Wow. I mean, it seems kind of weird that Musk would break off this huge deal based on the number of bots. Like, is there more to it than that in real life?
BOND: Yeah. And, I mean, almost since this deal was announced back in April, when - remember, one of the things he said about buying Twitter was that he wanted to clean up the spam and bot problem.
CHANG: Yeah.
BOND: Musk has hinted, if not just come out and said outright, that he has cold feet about this deal. And bots really are only part of it. It seems pretty clear at this point. Back in April, Musk agreed to pay $54.20 a share for Twitter, and that seemed like maybe a low price at the time. Twitter had been trading much higher just a year ago. But since then, the market has tanked. Tech stocks, including Twitter, are way down, and that has fueled speculation that Musk may feel like he's now overpaying for the company. And he even said back in May he might try to cut the price he's going to pay. But what he's made clear today is he doesn't want to buy Twitter at all.
CHANG: So what's the response from Twitter?
BOND: Well, the company's board chair, Bret Taylor, tweeted almost right away that Twitter is committed to closing the deal on the terms and at the price agreed and that it is going to take Musk to court to do so. And legal experts I spoke with say Twitter has a strong case. The legal agreement Musk signed says Twitter can take Musk to court - they can sue him to try to force him to complete the deal as long as his financing is in place. There's also a provision in this agreement calling for Musk to pay a billion-dollar breakup fee...
CHANG: (Laughter).
BOND: ...To Twitter if he walks away, you know, without a very sort of limited amount of reasons. But the experts I spoke to said, look, he could be on the hook for a lot more money if a court finds that actually he's the one that's breached the obligations...
CHANG: Yeah.
BOND: ...In this agreement.
CHANG: Yeah. OK. So legally speaking, it sounds like Twitter has a good case. But what does this kind of news do to the company?
BOND: Yeah. I mean, it is going to be a protracted battle if it does go to court. It would go to court in Delaware. And, you know, that's just going to create a lot of uncertainty for the company and for employees who are already feeling very uncertain. You know, there's this big cloud hanging over with this - all of the antics around this deal, all of the uncertainty. You know, there's a hiring freeze in place. There are spending cuts. The CEO has already shaken up the top ranks. Employees are leaving. And I think a lengthy, protracted, expensive legal battle - even if Twitter prevails - you know, might leave the company even more damaged than it was to begin with. And so there are some real questions here about, you know, whether or not Musk ends up owning the company, what is the state Twitter is left in after this entire saga concludes?
CHANG: Yeah. That is NPR's Shannon Bond. Thank you so much, Shannon.
BOND: Thanks, Ailsa.
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