Elon Musk said he wants to cancel the deal as he didn’t receive enough information on fake accounts, but Twitter is planning a legal response.
After months of uncertainty, billionaire Elon Musk is now seeking to walk away from his $44bn takeover of Twitter.
Musk said that Twitter has not complied with its contractual obligations as it failed to provide enough information on the number of fake accounts on the platform.
He claimed that Twitter ignored his requests for this information, rejected them for reasons that “appear to be unjustified” and gave “incomplete or unusable” information, according to filings published on Friday (8 July).
In May, Musk had said the deal was “temporarily on hold” until he could see calculations that confirm Twitter’s claim that spam and fake accounts represent less than 5pc of users on the site.
“Despite public speculation on this point, Mr Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the merger agreement,” Musk’s lawyers said in the filing.
“In short, Twitter has not provided information that Mr Musk has requested for nearly two months.”
Legal action by Twitter
Based on a clause in the deal, Musk may have to pay $1bn to Twitter if he wishes to pull out. However, the chair of the Twitter board said there are plans to sue Musk to complete the $44bn deal.
“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,” Twitter chair Bret Taylor tweeted on Friday.
According to reports by Bloomberg and the Financial Times yesterday (10 July), Twitter is assembling a legal team and is preparing to file a lawsuit early this week.
There’s also a possibility that both sides could reach a settlement in which Musk makes the acquisition at a lower price, according to Bloomberg.
A lot has taken place between Musk and Twitter since April, when he became one of the company’s biggest stakeholders.
There were initially plans to have him installed on the company’s board. However, a week later it was revealed Musk would not become a Twitter board member after all. The billionaire then offered to buy the company and take it off the stock market to “unlock” its potential.
In his first meeting with Twitter’s staff last month, Musk faced multiple questions about his plans for the business. Many employee concerns around remote working, layoffs and a reduced focus on content moderation were reportedly confirmed in the call.
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Elon Musk. Image: Thomas Hawk via Flickr (CC BY-NC 2.0)