After weeks of telegraph the moveElon Musk is officially trying to walk away from his $44 billion deal to buy Twitter and keep it private.
“Mr. Musk is terminating merger agreement because Twitter materially violates multiple provisions of that agreement [and] appears to have made false and misleading statements on which Mr. Musk relied in entering into the Merger Agreement,” Musk’s legal team wrote in a statement. letter to Twitter head of legal affairs Vijaya Gadde. The notice, also filed with the Securities and Exchange Commission, came late on a summer Friday afternoon.
As stated in the letter, Musk’s complaints relate to his demand that Twitter provide him with various types of user data so that he could conduct his own investigation into Twitter’s bot problem. Twitter provided some details, but said it could not provide all the requested details due to concerns about user privacy.
Musk agreed to buy Twitter on April 25 for a price of $44 billion, an amount many considered very generous given Twitter’s struggles to grow its user base and revenue. And that was before tech stocks started tanking in May. Shares of Twitter sold for $51.70 on the day the deal was announced, but had fallen to $36.81 a share by Friday’s close.
Now it seems likely that the Musk-Twitter saga will play out in court. Even if Musk proves that Twitter has materially broken elements of the sale agreement, he may be on the hook for $1 billion in breakup fees. And the consensus among legal experts is that: Musk’s Complaints Don’t Meet the Bar stipulated by the agreement, which stated that the deal must go through barring major changes to Twitter’s operations.
“The Twitter Board is committed to closing the transaction at the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement,” tweeted Twitter chairman Bret Taylor in response to Musk’s letter. “We are confident that we will prevail in the Delaware Court of Chancery.”