The founder and CEO of Tesla, Elon Musk, has communicated this Friday to Twitter his intention to terminate the contract to buy the social network by considering that the company is “in material breach of multiple provisions” of the agreement signed by both parties last April.
In a letter shared by the tycoon’s legal team, Musk has informed Twitter of his intention to halt the purchase of the social network after formally requesting on several occasions information related to the number of fake accounts found on the platform, as well as Twitter’s way of auditing and suspending them.
Musk had been publicly questioning Twitter’s ‘bot’ numbers for weeks, which many analysts saw as an attempt to drive down the tech giant’s share price. Twitter shares plunged more than six percent in post-announcement trading, CNN has reported.
In mid-May, the tycoon decided to temporarily suspend the purchase of Twitter, agreed late last April for about $44 billion (42.156 billion euros), pending details to support the company’s estimate that fake/spam accounts account for less than 5 percent of users.
Subsequently, through a letter sent in early June by Musk’s lawyers to the U.S. Securities and Exchange Commission (SEC), the billionaire’s legal team considered Twitter’s position a “material breach” of its obligations under the merger agreement, for which they warned that Elon Musk “reserves all resulting rights, including his right not to consummate the transaction and his right to terminate the merger agreement.”
For its part, Twitter has announced its intention to take legal action to enforce Musk’s compliance with the purchase agreement.
“The Twitter Board is committed to closing the transaction on the price and terms agreed to with Musk and plans to bring legal action to enforce the merger agreement. We are confident that we will prevail in Delaware Chancery Court,” Twitter CEO Bret Taylor has detailed on the social network.
Musk and Twitter agreed on a penalty of 987 million euros ($1 billion) to be paid by any party that withdrew from the deal, although if Twitter intends to force the purchase on the agreed terms, things could get complicated for the South African tycoon, as detailed by the aforementioned network.