Elon Musk has notified Twitter that he intends to terminate his deal to buy the social media group for $ 44 billion, accusing it of revealing “false and misleading” information about the number of fake and spam accounts.
Twitter chairman Bret Taylor responded quickly, saying the council was “committed to closing the deal on the price and terms agreed with Mr Musk” and taking legal action to enforce the deal. “We are confident that we will prevail in the Delaware Chancellery Court,” he added.
In a presentation Friday, lawyers for the billionaire CEO of Tesla claimed that Twitter was “materially violating several provisions” of the sale agreement and “appear[ed] having made false and misleading representations ”. The number of spam and fake accounts on the platform was “much higher” than the 5% estimated by Twitter, according to preliminary analysis by Musk’s advisers, according to the archive.
Separately, according to the filing, Musk is considering whether Twitter’s “declining business outlook” and Twitter’s financial outlook violate the deal.
The case also accuses Twitter of breaching its obligation to “conduct its business in the normal course” after CEO Parag Agrawal imposed a freeze on hiring, fired two senior staff members and this one. week announced that the company was firing a third party. of his talent acquisition team.
Twitter shares fell 8% in out-of-hours operations.
Musk had previously said that the fact that Twitter did not provide information about fake accounts would make it difficult for banks that agreed to lend him cash to complete the transaction. He had repeatedly indicated that he was considering moving away from the agreement reached in April.
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Under the terms of the deal, Musk can terminate the deal by paying $ 1 billion if he fails to secure financing for the transaction. Historically, however, U.S. courts have sided with sellers in legal battles when buyers try to terminate agreements to deter buyers from leaving for false reasons.
Since Musk agreed to buy Twitter in April, the market capitalizations of tech companies have fallen sharply, making the agreed-upon valuation expensive compared to rivals. The share price of Snap, one of Twitter’s closest competitors, has dropped more than 65 percent this year.
Musk secured funding from several prominent investors for the purchase, including Oracle co-founder Larry Ellison and Sequoia Capital, the venture capital group.
The Tesla CEO sent shockwaves to Wall Street when he announced his commitment to take over Twitter in what he described as an attempt to regain freedom of expression on the platform.
In a recent interview with the Financial Times, he said he would reverse the “morally incorrect” ban by former President Donald Trump, which was imposed after the deadly January 6, 2021 attack on the U.S. Capitol.