As Elon Musk addressed an audience of moguls on Saturday, he avoided discussing the collapsed Twitter deal. He only repeated allegations of fake account issues on the social media platform, according to one person who attended the conference known as the ‘billionaires’ summer camp’.
The CEO of Tesla and SpaceX announced his plan to terminate his $44 billion deal to buy Twitter less than 24 hours before he was on stage at the Allen & Co Sun Valley Conference, an annual gathering of media and technology executives in Idaho.
During the interview that Sam Altman, CEO of OpenAI, conducted, Musk discussed the possibility of life on Mars but remained tight-lipped about the Twitter situation.
OpenAI is an artificial intelligence research company that Musk and several others fund.
“It just seems like an absolute mess,” said one senior media executive who only spoke out during the interview on the condition of anonymity, “the guy makes his own rules … I’d hate to be Twitter, where you have to take this guy seriously.”
Typically, Sun Valley is covered with photographers capturing the arrivals of the media moguls and reporters making a note of power lunches at the Konditorei café on the property, according to dailymail.co.uk.
This year’s conference runs from July 6th until July 10th at the edge of Idaho’s Sawtooth National Forest in a tiny town of just 1,500 people. It is an invite-only affair.
After Musk’s announcement, one chief executive noted ‘the elephant in the room’.
Two conference attendees may have felt quite uncomfortable: Twitter CEO Parag Agrawal and Chief Financial Officer Ned Segal.
Musk responded to the Twitter CEO’s defence of how the company accounts for spam bots by making a public message to the Twitter CEO in the form of a poop emoji tweet.
It is not known if Musk has met with Segal or Agrawal at the conference.
An eight-page letter was delivered to Twitter via Musk’s attorneys explaining how Musk planned to call off the deal to acquire the social media network.
The document alleged that Twitter repeatedly failed for requests of crucial information over the past two months or obtain his consent before it took actions that would impact its business. One such step included the firing of two key executives.
Experts have speculated that the announcement may have been a way to drive the price down. Musk’s initial offer was $54.20 per share in April, but the price had dropped to $36.81 on Friday night, a dramatic drop from the initial offer.
Twitter’s chairman, Bret Taylor, posted a tweet on Friday saying the board was ‘committed to closing the transaction’ under the current terms of the deal. They were ‘confident’ they would win.
Musk’s attorney, Mike Ringler, has said that Twitter was in material breach of multiple provisions of the agreement.
“Mr Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect.
“While Section 6.4 of the Merger Agreement requires Twitter to provide Mr Musk and his advisors all data and information that Mr Musk requests ‘for any reasonable business purpose related to the consummation of the transaction,’ Twitter has not complied with its contractual obligations.
“For nearly two months, Mr Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.’
“This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr Musk incomplete or unusable information.”
Previously, Musk had threatened to halt the deal if the firm did not show proof that spam and bot accounts were fewer than 5 per cent of users who see advertising on the social media service.
Twitter responded by threatening to take legal action and claimed it was confident that it would win.
Bret Taylor tweeted: “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr Musk and plans to pursue legal action to enforce the merger agreement.
“We are confident we will prevail in the Delaware Court of Chancery.”
Later, that message was also retweeted by CEO Agrawal.
An anonymous Twitter employee spoke to NBC News about the collapsed deal and said that Musk had ‘f**king destroyed the company.’
“I guess it feels like we won. But it feels like the end of the movie, where the characters are bloodied and bedraggled with a Michael Bay explosion behind them. We could see this was coming, but in the meantime, he’s fucking destroyed the company.” the employee said.
In April, when workers demanded answers to how managers planned to handle an anticipated mass exodus prompted by Musk, Agrawal tried to quell employee anger during an all-hands meeting.
Agrawal would have pocketed a hefty $42 million had the Musk deal gone ahead!
Likely, there will now be a legal battle between the 16-year-old, San Francisco-based company and the entrepreneur billionaire.
Typically, companies end up re-negotiating deals or the acquirer paying the target a settlement when mergers and acquisitions are disputed in Delaware courts. This avoids the judge ordering that a transaction be completed.
Target companies often try to resolve the uncertainty around their future to move forward.
Twitter hopes that court proceedings will commence within a few weeks and a resolution will be found within a few months, according to a person familiar with the matter.
Twitter’s shares had a surge in early April when Musk took a stake in the social network company. This shielded it from a deep stock market sell-off that slammed other social media platforms.
But after April 25th, when he agreed to buy Twitter, the stock plummeted within days. Investors had cast speculation that Musk may walk away from the deal.
Twitter was trading at its lowest since March with its tumble after the bell on Friday.
Should Musk not be able to complete the deal for reasons like regulators blocking it, or the acquisition financing falling through, it is contracted that Musk must pay a $1 billion break-up to Twitter. If Musk, himself, terminates the deal, the break-up fee will not apply.
Uncertainty has been cast over the company’s future and stock price because of the promise Twitter has made to fiercely fight to complete the deal and Musk abandoning it. This is all happening during a time when rising interest rates and the possibility of a recession have thrown chaos into Wall Street.
Other online companies have seen their stocks drop an average of 45 per cent in 2022. Twitter’s stock declined 15 per cent during the same period.
Daniel Ives, an analyst at Wedbush, said Musk’s filing was terrible news for Twitter.
“This is a disaster scenario for Twitter and its Board as now the company will battle Musk in an elongated court battle to recoup the deal and/or the break-up fee of $1 billion at a minimum,” wrote Ives in a note to clients.