Elon Musk has moved to cancel his $44 billion bid to acquire Twitter, abandoning a move that had been met with growing skepticism on Wall Street.
The social media company, according to the world’s richest man’s legal team, appeared to have made “false and misleading representations” before Musk agreed to purchase the company, they claimed, constituting a “material breach” of the merger agreement.
Last night, Twitter vowed to enforce the agreement through the legal system, paving the way for a contentious legal dispute with the CEO of Tesla.
After Musk abruptly declared in May that it was “on hold” until he had more information about fake accounts on the platform, their April agreement was widely seen as being in jeopardy. The terms of the agreement stipulate a $1 billion termination fee under certain conditions.
Following the most recent development in the saga, Twitter shares fell 6.2 percent, or $2.25, to $34.56 during after-hours trading in New York.
Twitter, a San Francisco-based company founded in 2006, accepted Musk’s $54.20 per share offer after he disclosed a 9% stake in the company in the spring and declined an invitation to its board of directors.
Musk, 51, is the founder and CEO of both SpaceX and the electric vehicle manufacturer Tesla. According to Forbes, he has a personal fortune worth $238 billion, the majority of which comes from his ownership interests in the two companies. He has more than 100 million followers, making him one of Twitter’s most well-known users.
The Twitter board is committed to completing the transaction on the price and terms agreed upon with Mr. Musk, and plans to take legal action to enforce the merger agreement, according to Bret Taylor, chairman of Twitter, who made the following statement yesterday. We are sure that the Delaware Court of Chancery will rule in our favor.
Twitter last month gave Musk access to its “firehose,” a repository of raw data on hundreds of millions of daily tweets, after he publicly questioned the veracity of the company’s estimate that so-called spam bots accounted for about 5% of its total userbase.
However, Musk’s legal team claimed that Twitter had broken its contractual obligations in a letter to Vijaya Gadde, the company’s chief legal officer.
They claimed that the billionaire has been looking for information regarding the frequency of fake accounts on the social media group’s platform for almost two months, calling the data “fundamental” to the deal.
According to Musk’s attorneys, Twitter “has failed or refused to provide this information.” Twitter has occasionally ignored Mr. Musk’s requests, rejected them for apparent illogical reasons, and claimed to comply while providing Mr. Musk with inaccurate or incomplete information.
Tesla’s stock rose 1.4 percent, or $10.41, to $762.70 after being hit by investor worries about the potential effects of Musk’s pursuit of Twitter.