In a filing with the SEC on Friday, Elon Musk said that he would cancel the April 4th, $44 billion Twitter deal.
The Elon Musk takeover of Twitter took a new turn after he declared on Friday that he would not proceed with the $44 billion acquisition.
The announcement might be the beginning of a protracted legal struggle, and it is unclear if he will be able to simply walk away.
In response, Musk’s legal team announced that he was “terminating” the contract in a letter to Twitter’s top lawyer, Vijaya Gadde, charging Twitter with making “false and misleading representations upon which Mr. Musk relied upon entering into the Merger Agreement.”
Bret Taylor, the chairman of Twitter, responded to Musk’s SEC filing by stating that his organization is “committed to concluding the acquisition on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement.”
In May, Musk claimed that he had placed the agreement “temporarily on hold” so that his staff could look into the prevalence of spam or bot Twitter accounts.
Even after the firm gave him access to its internal data, Musk argued that his team had not been given enough information from Twitter to carry out an independent investigation.
The social media company itself estimated that bots accounted for 5% or less of platform users.
In the SEC filing, Musk’s team claimed that Twitter had “failed and refused to provide this information” and “not complied with its contractual obligations.”
Musk’s team outlined five areas where Twitter fell short of Musk’s demands during the takeover process.
These areas included failing to provide information on Twitter’s sampling method for detecting bot accounts, how the company identifies and suspends these accounts, how many monetizable daily active users the platform has, how the company calculates these numbers, and specifics about Twitter’s finances.
Twitter’s price has fallen dramatically since Musk’s initial $44 billion offer, which was centered on him paying $54.20 per share, as a result of a general stock market slide and concerns that Musk would actually go through with the acquisition.
Following Musk’s announcement that he would withdraw his purchase offer, Twitter’s shares dropped another 5% during regular trading before dropping a further 6% in after-hours trading on Friday to $34.61.
That is a decrease of over 37% from Musk’s original purchasing cost.
If Musk canceled the acquisition of Twitter, there would be a $1 billion breakup fee. Musk may be sued by Twitter under a provision known as “particular performance” if he refuses to pay. A Delaware court will serve as the final arbiter.