Elon Musk terminates Twitter takeover

Tesla CEO, Elon Musk, announced on Friday he is terminating his $44 billion Twitter takeover bid.

According to a letter by Skadden Arps attorney Mike Ringler in a Securities and Exchange Commission filing, on Friday, Mr Musk said his decision was due to Twitter’s “breach” of multiple provisions of the merger agreement.

“Mr Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement),” the letter said.

“While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consummation of the transaction,” Twitter has not complied with its contractual obligations.

“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.

“This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business. 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.

“Accordingly, for all of these reasons, Mr Musk hereby exercises X Holdings I, Inc.’s right to terminate the Merger Agreement and abandon the transaction contemplated,” Skadden Arps attorney Mike Ringler said in the letter.

On Friday, Twitter announced its board planned to pursue legal action to enforce the merger agreement.

Mr Musk is expected to pay Twitter $1 billion if he walks away from the 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. We are confident we will prevail in the Delaware Court of Chancery,” Twitter’s chairman, Bret Taylor, said in a tweet on Friday.

Mr Musk currently owns 73,486,938 shares of Twitter, which represents a 9.2 per cent stake in the company, according to the US Securities and Exchange Commission (SEC)13G filing.

READ ALSO: Elon Musk secures fresh $7 billion to fund Twitter takeover

On April 14, Mr Musk said he had offered to buy 100 per cent of Twitter for $54.20 per share in cash.

Upon completion of Twitter’s sale, the company would have become privately held.

It is the biggest social media acquisition, surpassing the $26.2 billion buyouts of Linkedin by Microsoft.

On May 5, Mr Musk announced he has secured $7 billion in new funding to fund the Twitter takeover.

On May 13, Mr Musk, however, announced he has halted his $44 billion Twitter takeover.

Mr Musk said he needed to resolve concerns over the number of fake or spam accounts on the platform.

Twitter’s share dropped by 6 per cent at $34.58 on Friday trading on the news of the termination. This is 36 per cent below the $54.20 per share Musk agreed to buy Twitter for in April.