Elon Musk abandons deal to buy Twitter; company says it will sue

AP

San Francisco, July 9

Elon Musk announced on Friday that he would abandon his tumultuous $44 billion offer to buy Twitter after the company failed to provide enough information about the number of fake accounts.

Twitter immediately fired back, saying it would sue the Tesla CEO to uphold the deal.

The likely unravelling of the acquisition was just the latest twist in a saga between the world's richest man and one of the most influential social media platforms, and it may portend a titanic legal battle ahead.

Twitter could have pushed for a $1 billion breakup fee that Musk agreed to pay under these circumstances. Instead, it looks ready to fight to complete the purchase, which the company's board has approved and CEO Parag Agrawal has insisted he wants to consummate.

In a letter to Twitter's board, Musk lawyer Mike Ringler complained that his client had for nearly two months sought data to judge the prevalence of "fake or spam" accounts on the social media platform.

"Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Musk's requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Musk incomplete or unusable information," the letter said.

Musk also said the information is fundamental to Twitter's business and financial performance, and is needed to finish the merger.

In response, the chair of Twitter's board, Bret Taylor, tweeted that the board is "committed to closing the transaction on the price and terms agreed upon" with Musk and "plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery".

The trial court in Delaware frequently handles business disputes among the many corporations, including Twitter, that are incorporated there.

Much of the drama has played out on Twitter, with Musk—who has more than 100 million followers—lamenting that the company was failing to live up to its potential as a platform for free speech.

On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 that Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5% to $752.29.

"This is a disaster scenario for Twitter and its board," Wedbush analyst Dan Ives wrote in a note to investors. He predicted a long court fight by Twitter to either restore the deal or get a $1 billion breakup fee.

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