Elon Musk is pulling out of the $44bn deal to buy Twitter

Billionaire Elon Musk has officially announced that he is pulling out of the $44 billion agreement to buy Twitter. This is the latest in the long standing epic drama which began many weeks ago when Elon Musk first bought 9.2% of the social media company, making him the largest shareholder of the company.

A couple of days later, ten days to be precise, he then placed a bid to buy 100% of the company at $44 billion

His decision to terminate the agreement was officially made known through a filing to the Securities and Exchange Commission on Friday. According to the statement, “Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect.”

The statement further states that even though the agreement required “Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consummation of the transaction,” Twitter has not complied with its contractual obligations.”

“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” (our letter to you dated May 25, 2022 (the “May 25 Letter”)). This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business.

Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”

In the statement, it would seem that Elon Musk and his team were not satisfied with Twitter CEO, Parag Agrawal’s defence on the company’s policy on bots and spam, in counter-argument to Elon Musk.

Thereafter he said in a series of tweets that he would not proceed with the $44 billion Twitter deal if Spam/fake accounts on the social media platform was more than 5%.

Despite this new filing, Twitter Chairman Bret Taylor tweeted that the company will “pursue legal action to enforce the merger agreement” and feels “confident we will prevail” in court.

Note that both parties, Elon Musk and Twitter, agreed to pay a $1 billion termination fee in the event that either backed out for specific reasons in the deal.

Musk agreed to pay the fee if he was not able to raise the funds to buy the company — which, so far, he hasn’t. And Twitter agreed to pay the fee if it found another buyer or its board recommended that stockholders vote against Musk’s offer.

So it would seem that Elon Musk is using the Twitter breach of not being forthcoming about critical business information as it pertains to bots, to try to get out of the agreement without paying anything.

We await more drama…….