Elon Musk to pull out of $44bn deal to buy Twitter
Elon Musk claims he wants to pull out of the deal after detecting several violations on Twitter.
Elon Musk is attempting to terminate his $44 billion (£36 billion) bid for Twitter, claiming repeated violations of the agreement.
The statement is the latest twist in a long-running affair that began in April when the world's richest person decided to purchase Twitter.
Musk stated that he decided to withdraw because Twitter did not provide adequate information on the quantity of spam and false accounts. Twitter has stated that it intends to take 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," Twitter chairman Bret Taylor wrote in a tweet, setting up a potentially long and protracted legal battle between the two sides.
The original merger deal calls for a $1 billion (£830 million) break-up fee.
Row over fake accounts
Musk stated in May that the transaction was "temporarily on hold" while he awaited data on the amount of bogus and spam accounts on Twitter.
The billionaire businessman had requested evidence to back up the company's claim that spam and bot accounts account for less than 5% of its overall users.
Musk's lawyer stated in a statement filed with the US Securities and Exchange Commission that Twitter had neglected or refused to give this information. "Sometimes Twitter has ignored Musk's requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Musk incomplete or unusable information," the letter reads.
Spam accounts are intended to disseminate information to a large number of individuals and affect their interactions with the site. Twitter announced on Thursday that it removes approximately 1 million such accounts per day.
Musk believes that spam or bot accounts may account for up to 20% of Twitter users. Twitter shares plunged 7% in extended trade following the announcement.
Twitter bots issue
Elon Musk has been attempting for weeks to find out how many daily active users Twitter has. In reality, it was only yesterday that it claimed to eliminate a million spam accounts every day.
Musk stated in a filing that he had been consistently refused information concerning the number of bot accounts on Twitter, which is why he wanted to end the arrangement.
Elon Musk, on the other hand, has already signed the deal, and it is unclear whether he can back out at this point. Musk will have to show that Twitter violated their agreement.
There are additional reasons Musk might want to back out of the transaction. The stock market value of huge tech businesses has plummeted in recent months; did Musk overpay?
Then there was the issue of the proposed merger's influence on Musk's other businesses. Tesla's stock price has plummeted since he disclosed his interest in Twitter.
His stance on free speech and how Twitter would filter in the future based on particular country regulations came across as naive at times.
It is worth noting that Twitter has reportedly plunged 12% postmarket after Musk ended the deal. Twitter plans to pursue legal action against Musk to enforce the deal at $54.20 per share price.