Tesla Inc Chief Executive Officer Elon Musk said on Friday that he Ending its $44 billion deal for Twitter Inc said the social media company had failed to provide information about fake accounts on the platform.
Twitter shares were down 7% in extended trading. Musk had offered $54.20 per share in April.
Twitter chairman Brett Taylor said on the micro-blogging platform that the board plans to take legal action to enforce the merger agreement.
The Twitter board is committed to closing the transaction on a price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement. We are confident that we will win the Delaware Court of Chancery.
— Brett Taylor (@btaylor) 8 July 2022
In a filing, Musk’s lawyers said Twitter failed or refused to respond to multiple requests for information on fake or spam accounts on the platform, which is fundamental to the company’s business performance.
“While Twitter is in material breach of several provisions of the agreement, it appears that Mr. Musk has made a false and misleading representation to enter into the merger agreement,” the filing said.
Musk also said that he was walking away because Twitter had taken over, citing Twitter’s obligation to “adequately protect the physical components of its current business organization”, high-ranking executives and a third talent acquisition team. fired. breach.
Twitter shares were down 6% at $34.58 in extended trading. That’s 36% less than the $54.20 per share Musk agreed to buy Twitter in April.
Twitter shares jumped after Musk took a stake in the company in early April, saving it from a deep stock market sell-off that slammed other social media platforms.
But after agreeing to buy Twitter on April 25, shares began to fall within days as investors speculated that Musk might walk away from the deal. Twitter was trading at its lowest level since March after the bell on Friday.
The announcement is another twist in the will-not-saga after Musk struck a deal to buy Twitter in April, but the purchase is put on hold until the social media company proves it to be spam. The bot account has less than 5%. its total users.
The contract asked Musk to pay Twitter a break-up of $1 billion if it cannot complete the deal for reasons such as falling acquisition financing or regulators blocking the deal. The break-up fee will not apply, however, if Musk terminates the deal on his own.
Musk’s decision is likely to spark a prolonged legal dispute between the billionaire and the 16-year-old San Francisco-based company.
Daniel Ives, an analyst at Wedbush, said Musk’s filing was bad news for Twitter.
“This is a disaster scenario for Twitter and its board as the company will now fight Musk in a protracted court battle to compensate for at least $1 billion in deal and/or breakup charges,” he wrote in a note to customers.
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