Tesla CEO Elon Musk announced Friday that he was terminating his $44 billion Twitter deal due to the company’s failure to provide information on spam accounts.
Shares in Twitter had risen to $51.70 when Musk made his $54.20 offer to buy the social media platform on April 25. They have now fell 6% in extended trading to $34.58.
Musk’s lawyers said that Twitter failed or refused to respond to several requests for information about fake or spam accounts, which is essential to the company’s business performance.
In a filing, they claimed that “Twitter is in material breach of multiple provisions” of the buyout deal,” and that the company “appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement”.
“For nearly two months, Mr. Musk has sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,” said Musk’s law firm Skadden Arps.
Twitter’s chairman Bret Taylor said the social media company is prepared to take Musk to court over the deal.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” Taylor tweeted Friday. “We are confident we will prevail in the Delaware Court of Chancery”.
Taylor’s tweet was retweeted by Twitter CEO Parag Agrawal.
According to the filing, Musk claims he told Twitter on June 6 that it breached the merger agreement by not providing sufficient information on the fake accounts.
“While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors,” it said.
While Musk has not been active on Twitter since the announcement, he is expected to speak at the Allen & Co.’s Sun Valley Conference in Idaho on Saturday.