Elon Musk informed Twitter on Friday that he is terminating his planned $44 billion acquisition of the company, accusing executives of failing to produce data on fake or spam accounts.
His attorneys filed a letter with the SEC (read it here) accusing Twitter of being in material breach of the merger agreement. They wrote that the company, upon repeated requests for data on the accounts, “has failed or refused to provide this information”
His attorneys wrote that “to the extent that Twitter has underrepresented the number of false or spam accounts on its platform, that may constitute a Company Material Adverse Effect under Section 7.2(b)(i) of the Merger Agreement. Mr. Musk is also examining the company’s recent financial performance and revised outlook, and is considering whether the company’s declining business prospects and financial outlook constitute a Company Material Adverse Effect giving Mr. Musk a separate and distinct basis for terminating the Merger Agreement.”
Musk’s move to sever the deal is not unexpected, as he had signaled discord with the company in recent weeks.
Twitter has argued that it has provided Musk with the information he has requested, as the deal includes a $1 billion penalty to the party responsible for killing the transaction.
More to come.
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