CEO of Tesla Elon Musk has officially terminated his deal to buy Twitter.
Musk’s $44 billion deal to buy the social media platform Twitter fell through after Musk wrote a letter to the SEC claiming Twitter failed to oblige by its contractual duties.
Reps from Twitter however are taking the contract dispute to court in an attempt to make Musk honor the contract.
Musk terminated the deal due to Twitter failing to disclose information and also due to the fact that 5% of Twitter’s monetized daily users are bots.
— Reuters (@Reuters) July 8, 2022
BREAKING: @ElonMusk sends a letter terminating deal to buy Twitter
— Benny Johnson (@bennyjohnson) July 8, 2022
CNBC had more on the story:
Billionaire Elon Musk wants to end his $44 billion deal to buy Twitter, according to a letter sent by a lawyer on his behalf to the company’s chief legal officer Friday.
But Twitter’s board chairman Bret Taylor said the company is still committed to closing the deal at the agreed upon price and plans to pursue legal action to enforce the agreement.
“We are confident we will prevail in the Delaware Court of Chancery,” Taylor wrote.
Twitter shares were down about 6% after hours on Friday.
In the letter, disclosed in a Securities and Exchange Commission filing, Skadden Arps attorney Mike Ringler charged that “Twitter has not complied with its contractual obligations.”
Ringler claimed that Twitter did not provide Musk with relevant business information he requested, as Ringler said the contract would require. Musk has previously said he wanted to assess Twitter’s claims that about 5% of its monetizable daily active users (mDAUs) are spam accounts.
“Twitter has failed or refused to provide this information,” Ringler claimed. “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
JUST IN: Elon Musk in a SEC filing says he terminated the $44 billion deal because Twitter "appears to have made false and misleading representations."
— Watcher.Guru (@WatcherGuru) July 8, 2022
USA Today had more on the story:
Billionaire Elon Musk called off his deal to buy social media company Twitter, according to a filing on Friday with the Securities and Exchange Commission.
Skadden Arps attorney Mike Ringler said in a letter to Twitter’s chief legal officer that “Twitter has not complied with its contractual obligations.”
For nearly two months, the company has failed to provide Musk with information about fake or spam accounts, the letter said.
“This is a disaster scenario for Twitter and its Board as now the company will battle Musk in an elongated court battle to recoup the deal and/or the breakup fee of $1 billion at a minimum,” said Daniel Ives, senior equity Research Analyst at Wenbush.
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