Elon Musk says he's backing out of his plan to buy Twitter
Nearly three months after declaring his intent to purchase Twitter and take it private, Elon Musk on Friday said he is backing out of the deal. In a filing with the US Securities and Exchange Commission (SEC) on Friday, Musk said Twitter is in "material breach" of the deal and "appears to have made false and misleading representations" as Musk sought information about the company's problem with spam accounts.
Twitter's board of directors on Friday quickly rebuffed Musk's latest move. In a release, the board said it is prepared to take legal action to ensure the deal closes at a price of $54.20 per share.
"We are committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plan to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery," the board said in a statement.
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Twitter has been in a state of turmoil since April, when Musk said he wanted to buy the social media platform. He lined up $46.5 billion in financing to back his unsolicited bid, relying on loans and $33.5 billion from his own equity.
As the deal materialized, some of Twitter's top executives were pushed out of the company and others resigned. As recently as this week, the company laid off a third of its talent acquisition team.
However, the eccentric billionaire businessman quickly began suggesting the deal was "on hold," complaining about the number of fake accounts on the Twitter platform. The document filed with the SEC on Friday said that information about fake or spam accounts is "fundamental to Twitter's business and financial performance."
"For nearly two months, Mr. Musk has sought the data and information necessary to make an independent assessment of the prevalence of fake or spam accounts on Twitter's platform," the filing said. "Twitter has failed or refused to provide this information. 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."
Musk argued that given the alleged lack of cooperation, Twitter has not complied with its contractual obligations, giving him the right to terminate the deal.
Additionally, the filing said: "Twitter's representation in the Merger Agreement regarding the accuracy of its SEC disclosures relating to false and spam accounts ... may form an additional basis for terminating the Merger Agreement."
Furthermore, the filing stated that the personnel shakeup at Twitter amounts to "deviating from its obligation to conduct its business in the ordinary course" -- another breach of the merger agreement alleged by Musk.