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 legal leader on Friday.
But Twitter chairman Bret Taylor said the company remains committed to closing the deal at the agreed price and plans to pursue legal action to enforce the deal.
“We are confident we will win in the Delaware Court of Chancery,” Taylor wrote.
Twitter shares fell around 6% after hours on Friday.
In the letter, revealed in a document from the Securities and Exchange Commission, Skadden Arps lawyer Mike Ringler accused that “Twitter has not complied with its contractual obligations.”[ads1];
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 consider Twitter’s claims that about 5% of their revenue-generating 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 providing Mr. Musk with incomplete or useless information.”
Ringler also accused in the letter that Twitter violated the merger agreement because it allegedly contains “substantially inaccurate representations.” This accusation is based on Musk’s own preliminary review of spam accounts on Twitter’s platform. Twitter has said that it is not possible to calculate spam accounts solely from public information, and that a team of experts is conducting a review to reach the figure of 5%.
“Although this analysis is still ongoing, all indications are that several of Twitter’s public revelations regarding mDAUs are either false or significantly misleading,” Ringer claimed.
He also claimed that Twitter violated its obligations under the agreement to obtain Musk’s consent before changing its ordinary business, pointing to recent layoffs in the company.
While Musk is now officially trying to get away from the deal, this saga is probably far from over.
Under the terms of the deal, Musk agreed to pay $ 1 billion if he withdraws. But Twitter can still try to keep Musk to his original deal or get a bigger payout by suing him for passing away if they dispute that his reasoning should let him out of the contract.
Twitter has reason to try to keep Musk to its original terms. The stock has fallen significantly since the board announced that they had accepted his offer to buy the company at $ 54.20 per share. On the day of that announcement, the stock ended the trading day at $ 51.70 per share. The Twitter share was at 36.81 dollars at Friday’s stock exchange closing.
SE: A timeline of the Elon Musk Twitter saga