Elon Musk is officially trying to pull out of his $44 billion agreement to purchase Twitter. In a filing Friday afternoon with the Securities and Exchange Commission, Musk’s team claims he is terminating the deal because Twitter was in “material breach” of their agreement and had made “false and misleading” statements during negotiations.
“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,’” Musk’s legal team writes. “Twitter has failed or refused to provide this information.”
Twitter still hopes to close the deal, despite Musk’s attempted termination. Twitter board chairman Bret Taylor wrote that the company will “pursue legal action to enforce the merger agreement” and feels “confident we will prevail” in court.
Musk has been setting the stage to abandon the deal since just weeks after he signed the agreement, claiming that Twitter released misleading stats about the prevalence of spam bots on its platform. It’s entirely unclear, however, that Musk can legally abandon his agreement simply because he isn’t happy about the presence of spam on Twitter — something he could have investigated prior to signing the deal. The Verge has reached out to Twitter for comment.
Twitter has gone to great lengths to show compliance with Musk’s requests. In early June, the company opened up “firehose” access to its service so that Musk could receive and analyze every tweet as it’s posted. The company has also continuously tried to reassure the public that it has spam and bots under control. On Thursday, it told press that it was blocking over a million spam accounts per day, and in May its CEO wrote a long thread about how Twitter determines how many of its users are bots.
It’s incumbent that Musk prove that Twitter has breached their agreement, as he can’t just pull out the signed agreement because he feels like it. And there’s good reason for Twitter to want to keep the agreement together: the deal was a potentially lucrative one for Twitter shareholders, offering $54.20 per share, up from the $36.81 it closed at today. There’s also $1 billion on the line as a breakup fee that will be paid by the party at fault.
On some level, Musk’s Twitter acquisition had always seemed more like a game than a real attempt to purchase and grow a business. The deal initially emerged after Musk purchased a 9 percent stake in Twitter (a buying spree he seems to have belatedly informed the SEC of), before agreeing to take a seat on the company’s board, complaining about the company on Twitter, and eventually abandoning his agreement to take a board seat.