Elon Musk is attempting to back out of his controversial Twitter acquisition.
The Tesla CEO announced his decision Friday in a letter filed with the U.S. Securities & Exchange Commission. Musk claims he’s terminating the $44 billion agreement because the platform made “false and misleading” statements during the negotiation process, and failed to meet its contractual obligations.
“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,” the letter reads.
It was written by Musk’s attorney Mike Ringler.
Back in April, Musk agreed to purchase Twitter at $54.20 a share ($43 billion); however, he later threatened to squash the deal if Twitter didn’t provide additional data on “spam bots,” which would allow he and his team to make an independent assessment on the prevalence of fake accounts on the platform.
“Twitter has failed or refused to provide this information,” the statement read. “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 also states Twitter breached the agreement by terminating its general manager of consumers and its revenue product lead, as well as announcing its plans to fire a third of its talent acquisition team. Ringer argues the company failed to comply with its agreement “to seek and obtain consent before deviating from its obligation to conduct its business in the ordinary course.”
According to the Associated Press, the acquisition included a $1 billion breakup fee that would be paid by whichever party decided to walk away. However, experts believe Twitter may decide to take the issue to court in an attempt to save the deal or secure a larger payout.
“Merger agreements are drafted to avoid exactly what Musk is doing, which is try to find some tiny little false thing and then say, ‘Whoops, I get to walk away now,” Ann Lipton, a business law professor at Tulane University Law School, told NPR.
“They specifically say things like, you can’t back out unless it’s not just false, but incredibly false, hugely false, massively damaging to the company … [Twitter] would much rather have the $54.20 without a court fight, but it’s worth fighting over … There is a lot that they could sacrifice that would still make it worth it in the end if they got to force Musk to close.”
Stay tuned as more information becomes available.
