What’s the deal with the Twitter takeover?
It’s not every day that an M&A is as widely publicised as Elon Musk’s Twitter takeover. As the news reports pile up, it’s clear it’s more than just a transaction. There’s a bit of everything, including employment law, privacy and data compliance, and human rights to boot. But first, let’s take a few steps back to the start of this deal. Before Musk bought out the company, he had a 9.2% stake, making him the largest shareholder: enough to get him on the board of directors, but not enough to make any major decisions. In April, Musk offered to buy out the entire company for $44billion, a sweet deal for shareholders as it guaranteed them a 38% higher profit than selling on the open market. Musk did try to back out of the deal a few months ago, but a breach of contract lawsuit from Twitter prompted him to relent and make the final purchase.
It’s not exactly been smooth sailing since the handover, and Musk openly stated that the company’s daily losses of $4million forced him to axe almost 50% of staff. Many employees were notified of their termination by email and were immediately banned from accessing offices or digital systems. In response to this, workers have filed a class action lawsuit against Twitter, claiming that the layoffs violate US legislation that entitles employees to 60 days’ advanced notice. Musk has also contributed to the debate by highlighting that all laid-off employees were offered three months of severance pay, supposedly 50% higher than the legal requirement.
At the time of writing, it’s estimated that 200 of the 3,700 axed Twitter employees are from the UK, but employment laws here differ from US regulations. Firstly, employers in the UK must provide proven reasons as to why a termination is necessary. Furthermore, if more than 20 workers are to be let go, then the company must follow the legal process of dismissal, which includes a government report and a minimum of 30 days’ notice before termination. A number of UK employees have reportedly contacted Winckworth Sherwood for legal advice, so we will have to wait and see what action will be taken against Twitter.