Twitter sues Elon Musk after ending $44 billion takeover deal | Science and technology news
Elon Musk has pulled out of a deal to take over Twitter for $44 billion (£36.5 billion).
In a statement to the US Securities and Exchange Commission, Representative for Mr Musk said Twitter breached the terms of an agreement and “appears to have made false and misleading statements”.
said Twitter had also failed to provide data and information requested by Mr Musk to allow him to make “an independent assessment of the prevalence of fake or spam accounts” on the social media platform.
“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has refused them for seemingly unjustified reasons, and sometimes it has claimed to do so while giving Mr. Musk incomplete or unusable information,” the statement continued.
As a result of Mr Musk’s decision, shares of Twitter fell 7% in extended trading, well below the $54.20 he had offered to pay for the company back in April.
The terms of the deal stipulate that Mr Musk will have to pay a $1bn (£830m) break-up fee if he fails to complete the transaction.
However, it appears that Twitter’s board of directors has no plans to accept the payment and instead will take legal action.
Twitter is confident of taking legal action
Twitter Chairman Bret Taylor tweeted that the company is “committed to complete the transaction at the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement.”
“We are confident that we will prevail in the Delaware Court of Chancery,” he added.
The possible dissolution of the agreement is just the latest twist in a saga between the world’s richest man and one of the most influential social media sites.
Much of the drama has been playing out on Twitter, where Mr Musk – who has more than 95million followers – bemoaned the company’s failure to fulfill its potential as a free speech platform.
Musk had put the deal on hold
Tesla’s chief executive previously threatened to halt the deal unless the company proved spam and bot accounts were less than 5% of users seeing ads on its service.
Last month, Twitter granted Mr Musk access to his “firehose,” the repository of raw data on hundreds of millions of daily tweets.
Twitter provides Musk with raw daily tweet data ‘concerning fake accounts’
Musk says he would reverse Trump’s Twitter ban if he took over the social media company
Mr Musk’s flirtation with buying Twitter seemed to have started in late March, when Twitter said it had contacted members of the board – including co-founder Jack Dorsey – and told them he was buying up stock in the company and was interested in either joining the board or Take over Twitter privately or create a competitor.
He later announced in a regulatory filing that he had become the company’s largest shareholder after acquiring a 9% stake valued at approximately $3 billion.
Initially, Twitter offered Mr Musk a seat on the board.
But six days later, the CEO tweeted on Twitter that Mr Musk would not be joining the board after all, and his offer to buy the company materialized quickly thereafter.
“This is a disaster scenario for Twitter”
Inside Twitter, Mr Musk’s offer was met with confusion and sinking morale, particularly after he publicly criticized one of Twitter’s top attorneys involved in content moderation decisions.
After the deal went through, the company imposed a hiring freeze, halted discretionary spending and fired two top executives.
Mr Musk’s decision will likely lead to a lengthy legal battle between the billionaire and the 16-year-old San Francisco-based company.
Wedbush analyst Daniel Ives said it was bad news for Twitter.
“This is a catastrophic scenario for Twitter and its board, as the company will now face Musk in a protracted court battle to recover the deal and/or at least a $1 billion breakup fee,” he said.