Advertisement

Elon Musk Spikes $44 Billion Deal to Buy Twitter, Legal Action Threatened

Elon Musk on Friday tried to scuttle his $44 billion acquisition of Twitter, claiming in an SEC filing that the social media company had failed to provide data he requested on the total number of spam and fake accounts on the platform.

“While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors,” the filing said.

In response, Twitter’s board chairman Bret Taylor tweeted its commitment “to closing the transaction on the price and terms agreed upon with Mr. Musk” and threatened “to pursue legal action to enforce the merger agreement.”

The dueling statements follow two months of suspended animation over Musk’s plans to follow through on his surprise takeover bid — and sets up a high-stakes legal battle over the future of Twitter.

Also Read:
Latest From Sun Valley: Elon Musk’s Twitter Drama and Mixed Signals About Live Events’ Comeback

The deal was previously to close later this year, subject to the approval of Twitter stockholders and regulators. According to the agreement, announced in April, Musk is on the hook for a $1 billion payment to the company if the deal falls through. Backing out of the deal will now make things ugly, as there is a “specific performance clause” that forces Musk to commit to paying for Twitter assuming his debt financing is still available.

The decision comes months after Musk first began the process of purchasing the company. In May, Musk said the deal was “temporarily on hold” while he sorted out metrics of spam accounts. The filing reiterated his feeling that Twitter has not been providing all the information Musk requested for the past two months and therefore breaching the merger agreement — though many have suggested that those concerns are a mere pretense to back out of an impulsive takeover bid that may seem less financially attractive now given the plunge in the stock price of both Twitter (13%) and Tesla (37%) since the start of the year.

“This is a disaster scenario for Twitter and its Board as now the company will battle Musk in an elongated court battle to recoup the deal and/or the breakup fee of $1 billion at a minimum,” Wedbush Securities analyst Dan Ives said in a statement. “Twitter’s stock on a standalone basis will now likely trade in the $25-$30 range when the stock opens on Monday with no deal likely. This soap opera has seen many twists and turns and now ultimately Twitter (and its Board) goes back to the drawing board.”

Also Read:
Elon Musk Takes Questions From Twitter Employees: ‘Exceptional’ Staffers Could Remain Remote