Elon Musk is terminating his $44 billion deal to buy Twitter, according to a filing the billionaire made with the Securities and Exchange Commission Friday.
Elon Musk is pulling out his deal to buy Twitter
Musk’s lawyers accused Twitter of having “failed or refused to” hand over information that would help Musk and his team ascertain the true number of bots or spam accounts on the social media platform.
“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,” the letter reads.
Twitter board chair Bret Taylor tweeted Friday that the company would pursue legal action against Musk.
“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,” he wrote. “We are confident we will prevail in the Delaware Court of Chancery.”
Legal experts have said Musk can’t just walk away from the deal. His April agreement to buy the company included a commitment to go through with the acquisition unless there’s a major change to the business, and legal experts say nothing has happened to meet that threshold. Musk has previously threatened to scuttle the deal if Twitter didn’t give him more data to run his own analysis on how many spam bots it has, while Twitter has said it can’t give up personal information on its users like their names, emails and IP addresses, which it uses to come up with its own bot numbers.
Musk did not immediately respond to requests for comment.
In the letter, Musk accused Twitter of a material breach of provisions in the agreement, making “false and misleading” representations and also cited the likelihood of a “material adverse effect,” a significant change that would affect the value of the company.
“In short, Twitter has not provided information that Mr. Musk has requested for nearly two months notwithstanding his repeated, detailed clarifications intended to simplify Twitter’s identification, collection, and disclosure of the most relevant information sought in Mr. Musk’s original requests,” the letter said.
In the letter, Musk also referred to the company’s finances as a potential reason to get out of the deal, citing the company’s “declining business prospects and financial outlook” as a separate reason for terminating the deal.
Musk argued in the letter to the company that Twitter broke its agreement not to substantially alter its business after the deal was signed by firing two senior executives in May and conducting layoffs in its hiring team in July. Musk said that he didn’t waive the right to do due diligence when he signed the deal, and expected Twitter to be forthcoming with more information.
Legal experts have said that when he signed the deal, he agreed to buy the company as is.
Musk shook up the social media world in April by agreeing to buy Twitter for $44 billion. He’s assembled a large group of co-investors, and leveraged his personal wealth to get the debt needed to finish the deal. But soon after his takeover announcement, a global sell-off in tech stocks eroded Musk’s own net worth, while making his $54 a share purchase price look like a serious overvaluation of Twitter.
Musk skeptics have said he made up the argument about bots simply to find a reason to get out of what he now saw as a bad deal. Musk himself knew about Twitter’s spam problem, and mentioned it as one of the reasons he wanted to buy the company in the first place.
Wall Street has been skeptical Musk will complete the deal for months. Twitter’s stock price is around $37 today, down nearly 30 percent from the $52 it traded at the day he made his acquisition announcement.
The filing came after The Washington Post reported Thursday that the deal was in serious jeopardy, with one of the co-investors not hearing from Musk’s team for weeks, according to people familiar with the situation who spoke on the condition of anonymity to discuss sensitive matters.
Gloss