Elon Musk has moved to terminate his $44 billion takeover of Twitter, walking away from a bid that had faced growing scepticism on Wall Street.
Lawyers representing the world’s richest man argued that the social media group was in “material breach” of the merger agreement, alleging that it appeared to have provided “false and misleading representations” before Musk agreed to acquire the business.
Twitter vowed to enforce the deal through the courts last night, setting the stage for an acrimonious legal battle with the Tesla boss.
Their agreement, finalised in April, was widely deemed to be in jeopardy after Musk abruptly declared in May that it was “on hold” until he had more information about fake accounts on the platform. The deal’s terms include a $1 billion termination fee under certain circumstances.
Shares in Twitter dropped 6.2 per cent, or $2.25, to $34.56 during out-of-hours trading in New York following the latest twist in the saga.
Twitter, founded in 2006 and based in San Francisco, California, accepted Musk’s $54.20-per-share offer after he disclosed a 9 per cent stake in the spring and spurned an invitation to join its board.
Musk, 51, is chief executive of Tesla, the electric carmaker, and SpaceX, the rockets and satellites group. He has a personal fortune of $238 billion, according to Forbes, largely derived from his stakes in the two businesses. He is one of Twitter’s most prominent users, with more than 100 million followers.
Yesterday Bret Taylor, chairman of Twitter, said: “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.”
Last month, after Musk had publicly questioned the accuracy of Twitter’s estimate that so-called spam bots accounted for about 5 per cent of its total userbase, the company provided him with access to its “firehose,” a repository of raw data on hundreds of millions of daily tweets.
But in a letter to Vijaya Gadde, Twitter’s chief legal officer, Musk’s legal representatives suggested the group had failed to comply with its contractual obligations.
The billionaire has sought data around the prevalence of fake accounts on the social media group’s platform for almost two months, they said, describing the information as “fundamental” to the deal.
“Twitter has failed or refused to provide this information,” Musk’s lawyers claimed. “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.”
Tesla’s stock, which had been hit by concern among investors over the potential impact of Musk’s pursuit of Twitter, gained 1.4 per cent, or $10.41, to $762.70.