SAN FRANCISCO (NYTIMES) – For years, Twitter was a runner-up social media company. It never grew to the size and scale of a Facebook or an Instagram. It simply muddled along.
Then, billionaire Elon Musk, a power user of the service, stormed in. He offered US$44 billion (S$61.8 billion) to buy Twitter and declared that the company could perform far better if he were in charge. He disparaged Twitter’s executives, ridiculed its content policies, complained about the product and confused its more than 7,000 employees with his pronouncements.
As Mr Musk revealed the company’s lack of business and financial prospects, Twitter’s stock plunged more than 30 per cent.
Now, as he tries to back out of the blockbuster deal, he is inexorably leaving Twitter worse off than it was when he said he would buy it. With each needling tweet and public taunt, Mr Musk has eroded trust in the social media company, walloped employee morale, spooked potential advertisers, emphasised its financial difficulties and spread misinformation about how Twitter operates.
“His engagement with Twitter took a severe toll on the company,” said Mr Jason Goldman, a member of Twitter’s founding team who has also served on its board of directors. “Employees, advertisers and the market at large cannot have conviction in a company whose path is unknowable and which will now go to court to complete a transaction with a bad-faith actor.”
The precarious situation underscores why Twitter is set to sue Mr Musk as soon as this week to force a completion of the deal.
The court battle is likely to be protracted and immense, involving months of expensive litigation and high-stakes negotiations by elite lawyers. A resolution is far from certain – Twitter might win, but, if it loses, Mr Musk could walk away by paying a break-up fee. Or the two sides could renegotiate or settle.
On Monday (July 11), the damage that Mr Musk, 51, has inflicted was evident. Twitter’s stock plunged more than 11 per cent to one of its lowest points since 2020 as investors anticipated the coming legal battle.
Since Twitter accepted Mr Musk’s acquisition offer on April 25, its stock has lost more than one-third of its value as investors have grown increasingly sceptical that the deal would get done on the agreed terms. Twitter declined to comment on Monday.
In a letter to Mr Musk’s lawyers on Sunday, the company’s lawyers said that his move to terminate the deal was “invalid and wrongful” and that Mr Musk “knowingly, intentionally, willfully and materially breached” his agreement to buy the firm. Twitter would continue to provide information to Mr Musk and work to close the transaction, the letter added.
Mr Musk did not return requests for comment. On Sunday, the billionaire, who has cited the number of fake accounts on Twitter’s platform as the reason that he cannot buy the company, tweeted a picture of himself laughing at the situation.