Elon Musk terminates $44 billion deal to buy Twitter over spam accounts; faces legal trouble and $1 billion breakup fee
Elon Musk said today that he’s backing out of the deal to buy Twitter for $4 billion over fake accounts and spam bots. In a letter to the Securities and Exchange Commission (SEC), Elon Musk said he’s seeking to end the $44 billion deal, citing a lack of sufficient information on fake accounts and spam bots.
As we reported yesterday, Musk said he currently doesn’t have enough information to determine the level of fake accounts, which may force the billionaire to walk away from the deal altogether.
“Twitter has “not complied with its contractual obligations” surrounding the deal, namely giving Musk enough information to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,” Musk said in the letter.
Meanwhile, Musk now faces a legal nightmare and a potential $1 billion breakup fee as he tries to walk from the multi-billion deal. Immediately after Musk’s announcement, Twitter’s board chairman Bret Taylor said in a post that the social giant is still committed to closing the deal at the agreed-upon price and plans to pursue legal action to enforce the agreement.
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. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
Musk had warned back in early June that he might walk away from the $44 billion takeover deal to acquire the company if Twitter fails to provide the data on the bot, spam, and fake accounts that he requested. In the letter to Twitter Chief Legal Officer Vijaya Gadde, Skadden attorney Mike Ringler for Musk said that “Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” according to CNBC.
On April 25, Twitter agreed to sell the company to Elon Musk for $44 billion. Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing the proposed transaction.
The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter. Musk needed to use his Tesla stock to raise $21 billion in equity to fund his takeover of the social media giant.
Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing the proposed transaction. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter.tm2220599d1_ex99-p