Elon Musk Officially Backs Out Of Buying Twitter
In yet another chapter of this whirlwind saga, Elon Musk has not announced that the Twitter purchase deal is officially off.
Elon Musk is officially trying to back out of his $44 billion deal to purchase Twitter. In a filing with the Securities and Exchange Commission last week, the billionaire’s legal team claims he is terminating the deal because the social media giant was in “material breach” of their agreement and made “false and misleading” statements during negotiations. “For nearly two months, Mr. Musk has sought the data and information necessary to make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,” the document says.
The filing then states that the micro-blogging site has failed or refused to provide this information. The news sent Twitter stock tumbling 5% in after-hours trading. The stock also fell sharply since the Twitter board accepted Elon Musk’s offer to buy the company in April for $54.20 a share. On the day of the announcement, the platform closed at $51.70 a share. On Friday, it closed at $36.81, USA Today reports. Interestingly, the social media site still hopes to close the deal, despite the Tesla CEO’s attempted termination.
Elon Musk has been preparing to abandon the Twitter deal since just weeks after he signed the agreement. However, it’s unclear if he can legally abandon the deal simply because he isn’t happy with the volume of spam and fake accounts on the platform. Especially since he chose to him waive due diligence when the agreement was first made in April. The decision was made to get the San Francisco-based company to accept his best and final offer, CNN Business reports. According to the publication, the Space X boss is contractually obligated to pay the company a $1 billion quitting fee if he backs out.
Contrary to his claims, Twitter has gone to great lengths to comply with Elon Musk’s requests. In June, the company gave him unlimited access to its service so that his team could receive and analyze every tweet as it was posted. The platform also continuously reassured the public that it has spam and bots under control by blocking over a million spam accounts per day. As such, the company’s board chairman Bret Taylor says they will pursue legal action to enforce the merger agreement and feels confident they will prevail in court.
Responding to the threat of legal action, Elon Musk mocked Twitter’s efforts to force him to purchase the company. In a post on the social media site, the business mogul shared four images of him laughing along with sarcastic captions that said, “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot information. Now they want to force me to buy Twitter in court. Now they have to disclose bot information in court.” That was followed by a picture of actor Chuck Norris playing chess with only a single pawn on his side of the board, and a complete set of pieces on the other side, with Musk tweeting, “Chuckmate.”
Interestingly, Elon Musk seems to be paying attention to Twitter’s stock price too. According to the letter, he is also considering whether the social media company’s declining business prospects and financial outlook constitute a Company Material Adverse Effect. This will give him a separate and distinct basis for terminating the agreement.