Elon Musk terminates attempt to buy Twitter, citing ‘multiple’ problems

(Getty Images for TIME)

Elon Musk is looking to pull out of his attempt to buy Twitter, citing multiple problems with the $44bn deal.

Mr Musk’s lawyers accused Twitter of having misled him about the nature of the company and the purchase.

Twitter “appears to have made false and misleading representations upon which Mr Musk relied when entering into the Merger Agreement”, lawyers said in a filing with the US Securities and Exchange Commission (SEC).

The deal between Twitter and Mr Musk had included a $1bn breakup fee, to be paid by the billionaire if the deal did not go through. But filings from Mr Musk’s legal team appeared to suggest that he considered the agreement to be invalid.

But Twitter suggested that it believes the agreement to still be valid – and that it will require Mr Musk to continue with it.

“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,” Bret Taylor, Twitter’s chairman, tweeted. “We are confident we will prevail in the Delaware Court of Chancery.”

Mr Musk has repeatedly said that Twitter executives have hidden the full extent of bots and automated accounts on the platform. Twitter has said that they account for less than 5 per cent of its active users – a number that Mr Musk said he would not believe until he had been able to check himself.

”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 filing continued.

“Twitter has failed or refused to provide this information. 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.”

Lawyers said that Mr Musk had asked for detailed information on how Twitter finds spam and fake accounts, and suspends them, as well as more detail on how it works out its daily active users.

Almost all of the letter focused on those problems with fake and spam accounts. But it also said that Twitter had changed its business significantly since Mr Musk had made the offer to buy it – pointing to the firing of a number of high-level employees in recent weeks.

Mr Musk has used his own Twitter account to comment on the progress of the takeover throughout. But the announcement came after a notable absence of updates on the deal from his account – and, on Friday, Mr Musk had been sharing memes from Anchorman and SpongeBob Squarepants, as well as his excitement over his other companies.

The planned takeover of Twitter began in January, when Mr Musk started increasing his stake in the company. In April, it was revealed that he had bought enough to become the company’s biggest shareholder.

Soon after that, he agreed to join Twitter’s board, and then promptly quit again. Instead, he made an offer to buy the whole company – and, by the end of April, Twitter had accepted.

In May, however, Mr Musk said the deal was “on hold” and linked to a report about Twitter’s disclosures on fake accounts. “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” he wrote on Twitter.

Since then, the deal has appeared to be stuck, with Mr Musk threatening to walk away and demanding more information on those fake accounts. In recent days, reports began to circulate that the deal could be collapsing.

On Friday, Mr Musk’s lawyers then filed the letter with the SEC, addressed to Twitter’s chief legal officer Vijaya Gadde, officially cancelling the merger agreement between the billionaire and the social network.

Throughout the negotiation of the deal, the share price of both Twitter and Mr Musk’s own Tesla has traded down. That led to speculation that Mr Musk could be finding a convenient way to get out of the deal, given the terms would now require paying considerably more than the stock market value of Twitter.