Elon Musk, chief executive officer of Tesla and the world’s richest person, has terminated his $44 billion offer to buy Twitter because the social media company did not share information on fake or spam accounts on the digital platform.
Bret Taylor, Twitter’s chairman, said on the micro-blogging platform that the board planned to pursue legal action to enforce the merger agreement.
Elon Musk’s lawyers said Twitter failed or refused to respond to multiple requests for information on fake or spam accounts on the platform, which is fundamental to the digital company’s business performance.
Elon Musk’s stake in Twitter is around 9.2 percent. Twitter earlier invited Elon Musk to join its board in order to avoid a takeover bid. But Elon Musk declined the offer. If Elon Musk is a board member, he cannot buy more than 14.9 percent stake in Twitter.
“Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Elon Musk relied when entering into the Merger Agreement,” the filing said.
Elon Musk also said he was walking away because Twitter fired high-ranking executives and one-third of the talent acquisition team, breaching Twitter’s obligation to preserve substantially intact the material components of its current business organization.
Elon Musk’s decision is likely to result in a legal tussle between the 51-year-old billionaire and the 16-year-old San Francisco-based tech company.
The contract calls for Elon Musk to pay Twitter a $1 billion break-up if he cannot complete the deal for reasons such as the acquisition financing falling through or regulators blocking the deal. The break-up fee would not be applicable, however, if Elon Musk terminates the deal on his own.