{"id":22951,"date":"2022-07-10T12:29:54","date_gmt":"2022-07-10T19:29:54","guid":{"rendered":"https:\/\/occupysf.net\/?p=22951"},"modified":"2022-07-10T12:49:29","modified_gmt":"2022-07-10T19:49:29","slug":"elon-musk-backing-out-of-twitter-deal-could-be-disaster-scenario-for-the-s-f-company","status":"publish","type":"post","link":"https:\/\/occupysf.net\/index.php\/2022\/07\/10\/elon-musk-backing-out-of-twitter-deal-could-be-disaster-scenario-for-the-s-f-company\/","title":{"rendered":"Elon Musk backing out of Twitter deal could be \u2018disaster scenario\u2019 for the S.F. company"},"content":{"rendered":"\n

By Roland Li<\/a><\/p>\n\n\n\n

July 8, 2022 (SFChronicle.com)<\/p>\n\n\n\n

\"Elon
Elon Musk is backing out of his deal to purchase the social media company Twitter.Dimitrios Kambouris\/TNS<\/figcaption><\/figure>\n\n\n\n

The world\u2019s richest man and one of the world\u2019s largest social networks appear headed for a showdown in court.<\/p>\n\n\n\n

Elon Musk is seeking to terminate his $44 billion deal to buy Twitter, blaming the company for withholding information on its number of spam and fake accounts, according to a letter sent to Twitter on Friday from his attorney.<\/a><\/p>\n\n\n\n

Musk alleged that Twitter provided \u201cfalse and misleading representations\u201d and breached the contract by providing incomplete information.<\/p>\n\n\n\n

San Francisco-based Twitter plans to sue to complete the deal, Chairman Bret Taylor wrote in a message on Twitter.<\/a><\/p>\n\n\n\n

\u201cThe 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,\u201d wrote Taylor, who is also co-CEO of Salesforce.<\/p>\n\n\n\n

The deal includes a $1 billion penalty if Musk backs out. When reached for comment, Twitter reiterated the statement posted by Taylor.<\/p>\n\n\n\n

Twitter shares were down 5% on Friday to $36.81 at market close, nearly 33% below Musk\u2019s offer of $54.20 per share. They fell around 5% further in after-market trading to around $34.94 per share. Amid a broader tech downturn, the company instituted a hiring freeze in May<\/a> and fired top executives. The company confirmed additional layoffs<\/a> in its talent acquisition team this week.<\/p>\n\n\n\n

Musk\u2019s Friday letter said the company\u2019s \u201cdeclining business prospects and financial outlook\u201d were an additional reason for scrapping the deal.<\/p>\n\n\n\n

The billionaire businessman\u2019s move to terminate the purchase is a \u201cdisaster scenario for Twitter,\u201d which will lead to an \u201celongated court battle,\u201d Wedbush Securities analysts Dan Ives and John Katsingris wrote in a research note on Friday. They suggest the company\u2019s shares will fall further on Monday to $25 to $30, or around half of Musk\u2019s acquisition price.<\/p>\n\n\n\n

\u201cFrom the beginning this was always a head scratcher to go after Twitter at a $44 billion price tag for Musk and never made much sense to (Wall) Street,\u201d they wrote.<\/p>\n\n\n\n

For now, CEO Parag Agrawal will continue to lead Twitter at its 1355 Market St. headquarters<\/a> in San Francisco. Musk appeared to criticize the company\u2019s policy of letting workers stay remote forever, running an April poll on Twitter titled, \u201cConvert Twitter SF HQ to homeless shelter since no one shows up anyway.\u201d (Twitter does not own the building and has no power to rezone it for homeless housing.)<\/p>\n\n\n\n

Musk mandated office workers<\/a> come into the office full-time at his other companies, Tesla and SpaceX, leading to speculation that he could wipe away Twitter\u2019s remote-friendly work policies after he completed the purchase. Requiring workers back in the office could help bolster the Mid-Market neighborhood\u2019s economy but could also lead to resentment among Twitter employees, who were already on edge about potential policy changes.<\/p>\n\n\n\n

The four-month saga began in March, as Musk began amassing enough shares to acquire 9% ownership, according to an April regulatory filing. He was offered a seat on the board but rejected it less than a week later. Soon after, he began mounting a takeover bid, backed by some of the world\u2019s biggest banks<\/a> including Morgan Stanley, Barclays and Bank of America. Top venture capital firms Sequoia Capital and Andreessen Horowitz also committed $1.2 billion for equity, along with $1 billion from billionaire Oracle co-founder and Tesla board member Larry Ellison. Twitter accepted the deal on April 25.<\/p>\n\n\n\n

Despite the backing of business heavyweights and quick offer, the deal\u2019s aftermath was unusually combative and tense.<\/p>\n\n\n\n

Musk\u2019s attorney, Mike Ringler of Skadden, Arps, Slate, Meagher & Flom LLP sent the Friday letter to Vijaya Gadde, Twitter\u2019s chief legal officer \u2014 the same executive that Musk publicly criticized for the company\u2019s policies over content moderation and harassment, which Musk has called censorship. Just two days after the purchase agreement, Musk tweeted a meme that suggested \u201cleft wing bias\u201d from Gadde, unleashing a torrent of online abuse at her from among Musk\u2019s more than 86 million followers at the time.<\/p>\n\n\n\n

Musk previously said he would reverse Twitter\u2019s ban on former President Donald Trump, who was banished from the social network after the Jan. 6 insurrection. Musk has called himself a \u201cfree speech absolutist,\u201d and critics of Twitter\u2019s censorship, particularly conservative activists, hailed his pending purchase, believing it would lead to unfettered posting. Supporters of Twitter\u2019s policies restricting hate speech, harassment and misinformation, which include Twitter employees, have been wary of the deal\u2019s implications.<\/p>\n\n\n\n

Agrawal, Twitter\u2019s CEO, appeared to defend his colleagues and the company\u2019s policies without referencing Musk by name, writing in April<\/a>, \u201cI took this job to change Twitter for the better, course correct where we need to, and strengthen the service. Proud of our people who continue to do the work with focus and urgency despite the noise.\u201d<\/p>\n\n\n\n

Three weeks later, Agrawal wrote about the company\u2019s spam policies,<\/a> which are now at the heart of Musk\u2019s move to scrap the purchase. Musk\u2019s response was tweeting a poop emoji at him.<\/p>\n\n\n\n

Roland Li (he\/him) is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com<\/a> Twitter: @rolandlisf<\/a><\/em><\/a><\/p>\n\n\n\n

Written By Roland Li<\/a><\/p>\n\n\n\n

Roland Li covers commercial real estate for the business desk, focusing on the Bay Area office and retail sectors.<\/p>\n\n\n\n

He was previously a reporter at San Francisco Business Times, where he won one award from the California News Publishers Association and three from the National Association of Real Estate Editors.<\/p>\n\n\n\n

He is the author of “Good Luck Have Fun: The Rise of eSports,” a 2016 book on the history of the competitive video game industry. Before moving to the Bay Area in 2015, he studied and worked in New York. He freelanced for the Wall Street Journal, the New York Times and other local publications. His hobbies include swimming and urban photography.<\/p>\n\n\n\n

\"San<\/a><\/figure>\n\n\n\n

\"HEARST\u00a92022 Hearst<\/p>\n","protected":false},"excerpt":{"rendered":"

By Roland Li July 8, 2022 (SFChronicle.com) The world\u2019s richest man and one of the world\u2019s largest social networks appear headed for a showdown in court. Elon Musk is seeking to terminate his $44 billion deal to buy Twitter, blaming the company for withholding information on its number of spam… Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/22951"}],"collection":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/comments?post=22951"}],"version-history":[{"count":2,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/22951\/revisions"}],"predecessor-version":[{"id":22953,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/22951\/revisions\/22953"}],"wp:attachment":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/media?parent=22951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/categories?post=22951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/tags?post=22951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}