Elon Musk ‘terminates’ $44 billion Twitter-purchase deal, Twitter promises court fight
Billionaire Elon Musk is seeking to break his agreement to buy Twitter for $44 billion, claiming the Bay Area social-media giant refused to tell him how many of the accounts on its platform were fake. Musk had been trying to get that information since early May, after reaching an agreement in late April to buy the San Francisco company, according to a letter to Twitter’s board filed Friday with the U.S. Securities and Exchange Commission. Musk had demanded Twitter prove spam bots made up fewer than 5% of its users. “Mr. Musk has been clear that he views Twitter’s non-responsiveness as a material breach of the Merger Agreement giving him the right to terminate the Merger Agreement if uncured,” said the letter from a law firm. Twitter on Friday said it would see Musk in court. “We are committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plan to pursue legal action to enforce the merger agreement,” the company said Friday in a news release. “We are confident we will prevail in the Delaware Court of Chancery.” Musk’s attempt to withdraw from the deal comes after weeks of tumult that saw him hinting at substantial loosening of Twitter’s rules on what material could be posted. A prolific tweeter, Musk in April suggested on Twitter that he would seek to have the platform hew closely to the First Amendment, which does not prohibit hate speech or false statements. In mid-May, he claimed he was putting the deal to buy Twitter “on hold” while he awaited “details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” But the letter to the SEC may merely herald a new chapter in the dramatic saga: Musk signed a binding agreement to buy the company, which included a $1 billion penalty for breaking the deal, and some analysts predict a lengthy court fight. His plan to buy Twitter had earned the support of the firm’s co-founder and former CEO Jack Dorsey, who tweeted in April that the deal was “the right path” and that “Elon’s goal of creating a platform that is ‘maximally trusted and broadly inclusive’ is the right one.” Musk sold about $8.5 billion in Tesla stock to fund the purchase, and pulled together $7 billion in promised backing from investors including Oracle co-founder Larry Ellison. Twitter, like other major Bay Area technology companies, has been hit with stock market losses, knocking its value down 14% since the start of the year. News of Musk’s attempted exit from the purchase deal sent Twitter’s plummeting more than 5% in after-hours trading by 4 p.m. Friday. The company in May paused hiring for all but essential positions. This week, it said it had laid off 30% of its hiring team — fewer than 100 employees — the Wall Street Journal reported. Related Articles Technology | BART sued over ads targeting Elon Musk and his lab-monkey research Technology | Elon Musk defends right-wing author who deadnamed Elliot Page, insulted trans identity Technology | Man accused of buying 39 Teslas via $45 million scam with apparent false ties to Elon Musk Wedbush Securities analysts Dan Ives and John Katsingris predicted Friday that the broken deal would end up in court. “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,” the analysts said in a note to investors.