Elon Musk wants to withdraw from his attempt to buy Twitter, citing several issues with the $ 44 billion deal.
Musk’s lawyers accused Twitter of having deceived him about the nature of the business and the purchase.
Twitter “appears to have made false and misleading statements on which Mr. Musk relied when he signed the merger agreement,” lawyers said in a presentation to the U.S. Securities and Exchange Commission (SEC).
The deal between Twitter and Musk had included a $ 1 billion rupture fee, which the billionaire had to pay if the deal did not pass. But documents from Musk’s legal team seemed to suggest he considered the deal invalid.
But Twitter suggested it believes the deal is still valid and will require Musk to continue with it.
“The Twitter Board is committed to closing the transaction according to the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement,” tweeted Bret Taylor, president of Twitter. “We are confident that we will prevail in the Delaware Chancellery Court.”
Musk has repeatedly said that Twitter executives have hidden the full extent of robots and automated accounts on the platform. Twitter has said they account for less than 5 percent of its active users, a figure that Mr. Musk said he wouldn’t believe it until he could check it out himself.
“For nearly two months, Mr. Musk has been searching for the data and information needed to“ make an independent assessment of the prevalence of fake or spam accounts on the Twitter platform, ”the presentation continued.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes rejected them for seemingly unjustified reasons, and sometimes claimed to comply with them while gave Mr. Musk incomplete or unusable information.
Lawyers said Mr Musk had asked for detailed information on how Twitter finds spam and fake accounts and suspends them, as well as more details on how daily active users work.
Almost the entire letter focused on these issues with fake and spam accounts. But he also said Twitter had significantly changed its business since Mr. Musk made the offer to buy it, noting the dismissal of some high-level employees over the past few weeks.
Musk has used his own Twitter account to comment on the progress of the acquisition throughout the process. But the announcement came after a noticeable lack of updates on his account deal, and on Friday, Mr. Musk had been sharing memes from Anchorman and SpongeBob Squarepants, as well as his enthusiasm for his other ventures.
The planned takeover of Twitter began in January, when Mr. Musk began to increase his stake in the company. In April, it was revealed that he had bought enough to become the company’s largest shareholder.
Shortly afterwards, he agreed to join the Twitter board and then quickly resigned. Instead, he made an offer to buy the entire company, and by the end of April, Twitter had accepted.
In May, however, Musk said the deal was “pending” and linked to a report on Twitter revelations about fake accounts. “Twitter is temporarily suspended pending details that support the calculation that spam accounts actually account for less than 5% of users,” he wrote on Twitter.
Since then, the deal seemed to be stalled, with Mr. Musk threatening to leave and demanding more information about these fake accounts. In recent days, reports have begun circulating that the deal could be collapsing.
On Friday, Musk’s lawyers filed the letter with the SEC, addressed to Twitter’s chief legal officer, Vijaya Gadde, officially canceling 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 Tesla has dropped. This led to speculation that Mr Musk could find a convenient way out of the deal, as the terms would now require paying much more than the stock market value of Twitter.