Elon Musk Drops $44-Billion Twitter Deal; Board Vows Legal Action; What We Know So Far

Elon Musk has terminated the $44 billion Twitter deal, citing that the microblogging platform had failed to provide him proper information on the fake accounts on its site. The billionaire notified the decision in an US SEC filing, accusing the social media company of breaching “multiple provisions of the agreement”. However, Twitter’s board in a bid to still close the deal, said that it would sue Elon Musk to enforce the legal agreement. This comes after months of speculation with Musk suspending the Twitter deal, citing misinformation over fake accounts on the platform.

“Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement),” said the lawyers of the tech mogul in the SEC filing dated July 8, Sunday.

However, Twitter did not seem to be giving up so soon with the company’s chairman Bret Taylor taking to the microblogging platform to announce that it was taking legal action against Musk to enforce the deal.

“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. We are confident we will prevail in the Delaware Court of Chancery,” said Taylor.

As per the deets of the agreement, Elon Musk has to pay $1 billion as a break-up penalty if the deal does not sail through for reasons including the acquisition financing falling through or regulators blocking the deal. The break-up fee would not be applicable, however, if Musk terminates the deal on his own, Reuters said in a report.

Shares of Twitter were down 6 per cent at $34.58 in extended trading. That was around 36 per cent below the $54.20 per share Elon Musk had agreed to buy Twitter for in April.

“The Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consummation of the transaction,” Twitter has not complied with its contractual obligations,” stated the letter filed with the US security exchange on Sunday.

For nearly two months, Musk had sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform”, claimed the Tesla CEO’s lawyers.

“This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business. Twitter has failed or refused to provide this information,” they said in the letter.

Elon Musk had in June said that he would walk away from the deal if Twitter failed to provide information on bot accounts. Twitter, at the time, had said that they had provided all information to the billionaire.

“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 filing further read.

The decision taken by Elon Musk may result in a prolonged battle between him and Twitter, experts said.

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