Elon Musk is terminating his $44 billion deal to buy Twitter, according to a filing the billionaire made with the Securities and Exchange Commission on Friday.
Musk’s lawyers sent a letter to Twitter saying he is “terminating their merger agreement,” according to the filing.
Twitter board chair Bret Taylor tweeted Friday that the company would pursue legal action against Musk.
“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,” he wrote. “We are confident we will prevail in the Delaware Court of Chancery.”
But legal experts say Musk can’t just walk away from the deal.
His April agreement to buy the company included a commitment to go through with the acquisition unless there’s a major change to the business, and legal experts say nothing has happened to meet that threshold.
Musk has previously threatened to scuttle the deal if Twitter doesn’t give him more data to run his own analysis on how many spam bots it has, while Twitter has said it can’t give up personal info on its users – such as their names, emails and internet protocol, or IP, addresses – that it uses to come up with its own bot numbers.
Musk and Twitter did not immediately respond to requests for comment.
It’s unclear what will happen next, though experts have said a big legal battle would be likely if Musk tried to walk away.
In a June statement, the company said: “We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
Even if Twitter accepts his argument, Musk will probably have to pay a $1 billion breakup fee.
In the letter to Twitter, Musk’s lawyers accused Twitter of having “failed or refused to” hand over information that would help Musk and his team ascertain the true number of bots or spam accounts on the website.
“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,” the letter continues.
Musk shook up the social media world in April by agreeing to buy Twitter for $44 billion.
He’s assembled a large group of co–investors and leveraged his personal wealth to get the debt needed to finish the deal.
But soon after his takeover announcement, a global sell–off in tech stocks eroded Musk’s net worth while making his $54-a-share purchase price look like a serious overvaluation of Twitter.
Musk skeptics have said he made up the argument about bots simply to find a reason to get out of what he now sees as a bad deal.
Musk knew about Twitter’s spam problem and mentioned it as one of the reasons he wanted to buy the company in the first place.
Wall Street has for months been skeptical Musk will complete the deal.
Twitter’s stock price is around $37 today, down nearly 30% from the $52 it traded at the day he made his acquisition announcement.
The filing came after the Washington Post reported Thursday that the deal was in serious jeopardy, with one of the co–investors not hearing from Musk’s team for weeks, according to people familiar with the situation who spoke on the condition of anonymity to discuss sensitive matters.
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