Tech

Elon Musk says he is terminating $44bn Twitter deal

Elon Musk has told Twitter that he intends to extend his agreement to buy the social media group for $44 billion.

Twitter chairman Bret Taylor was quick to respond, saying the board is “committed to completing the transaction at the price and terms agreed with Mr Musk” and will take legal action to enforce the agreement. “We are confident that we will prevail in the Delaware Court of Chancery,” he added.

In a Friday filing, lawyers for the billionaire Tesla boss claimed Twitter “constituted a material breach of several provisions” of the contract of sale and “appears[ed] having provided false and misleading information”. The number of spam and fake accounts on the platform is “substantially higher” than the 5 percent estimated by Twitter, according to a preliminary analysis by Musk’s advisors, the filing said.

Separately, according to the filing, musk is examining whether Twitter’s “sloping business prospects” and financial prospects violate the agreement.

The filing also accused Twitter of failing to meet its obligation to “conduct its business as normal” after Chief Executive Parag Agrawal imposed a hiring freeze, fired two senior employees and announced this week that the company would hire a third would be fired from his talent acquisition team.

Twitter’s shares fell 8 percent in after-hours trading.

Musk had previously said that Twitter’s failure to provide information about fake accounts would make it problematic to secure funding from banks that agreed to lend him the money to complete the transaction. He had repeatedly indicated that he was considering walking away from the deal agreed in April.

Under the terms of the agreement, Musk can exit the deal by paying $1 billion if he fails to secure financing for the transaction. However, US courts have historically sided with sellers in litigation when buyers attempt to exit deals to discourage buyers from walking away on flimsy grounds.

Since Musk agreed to buy Twitter in April, tech companies’ market caps have fallen sharply, making the agreed valuation expensive relative to peers. Snap, one of Twitter’s closest competitors, has fallen more than 65 percent this year.

Musk secured funding for the acquisition from several prominent investors, including Oracle co-founder Larry Ellison and Sequoia Capital, the venture capital group.

The Tesla boss sent shockwaves through Wall Street when he announced his bid to take over Twitter, in what he described as an attempt to bring back freedom of speech on the platform.

In a recent interview with the Financial Times, he said he would reverse former President Donald Trump’s “morally wrong” ban imposed after the deadly attack on the US Capitol on January 6, 2021.

Elon Musk says he is terminating $44bn Twitter deal Source link Elon Musk says he is terminating $44bn Twitter deal

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