Twitter vows legal fight after Elon Musk pulls out of $44 billion deal
Twitter vows legal fight after Elon Musk pulls out of $44 billion deal
Elon Musk on Friday pulled the plug on his $44 billion deal to buy Twitter and take it private, a regulatory filing showed. Musk accused the social media giant of misleading statements about the number of fake accounts.
Twitter will sue Elon Musk to enforce the $44 billion deal to buy the company that the billionaire now wants to abandon, the chair of the social media giant's board said on Saturday.
"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," Bret Taylor tweeted.
Elon Musk on Friday pulled the plug on his $44 billion deal to buy Twitter and take it private, a regulatory filing showed. Musk accused the social media giant of "misleading" statements about the number of fake accounts.
Twitter has made “misleading representations" over the number of spam bots on the social network, and hasn’t “complied with its contractual obligations" to provide information about how to assess how prevalent the bots are, Musk’s representatives said Friday in a letter to Twitter as part of a regulatory filing.
Musk also said he was walking away because Twitter fired high-ranking executives and one-third of the talent acquisition team, breaching Twitter's obligation to "preserve substantially intact the material components of its current business organization.
The Tesla CEO had earlier threatened to walk away from the deal if the company can't show that less than 5% of its daily active users are automated spam accounts.
Previously, the world's richest man expressed misgivings and even implied he could walk away from the deal over concerns about what he believes are an abundance of fake accounts.
According to the Washington Post, Musk has been unable to pin down the percentage of Twitter accounts that are not genuine, despite being given access to internal data.
Meanwhile, Twitter had said that it removes 1 million spam accounts each day and denied the claim saying, bots are less than 5% of the total users.
Musk announced the termination of a USD 44 billion Twitter purchase deal in a letter sent by Musk's team to Twitter earlier on Saturday. Musk decided to suspend the deal due to multiple breaches of the purchase agreement. The Tesla CEO's team strongly believes that the proportion of spam and fake accounts is "wildly higher" than 5 per cent, according to the letter.
"As further described below, Mr Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement," the letter said on Friday.
In April, Musk reached an acquisition agreement with Twitter at USD 54.20 per share in a transaction valued at approximately USD 44 billion. However, Musk put the deal on hold in May to allow his team to review the veracity of Twitter's claim that less than 5 per cent of accounts on the platform are bots or spam.
accused the microblogging website of breaching the merger agreement and threatened to walk away and call off the acquisition of the social media company for not providing the data he has requested on spam and fake accounts.
Against this backdrop, Twitter's CEO Parag Agrawal last month stood by his company's longtime spam metric. "Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," the company said in a statement in June.
Musk’s deal with Twitter had included a provision that if it fell apart, the party breaking the agreement would pay a termination fee of $1 billion, under certain circumstances. Legal experts have debated whether the conflict over spam bots is enough to allow Musk to walk away from the deal.
But Musk may not be able to walk away simply by paying the termination fee. The merger agreement includes a specific performance provision that allows Twitter to force Musk to consummate the deal, according to the original filing. That could mean that, should the deal end up in court, Twitter might secure an order obligating Musk to complete the merger rather than winning monetary compensation for any violations of it. The company has repeatedly said that it will pursue that legal path.
