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Twitter to take legal action as Musk cancels $44B acquisition deal

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Twitter to take legal action as Musk cancels $44B acquisition deal

Musk’s attorneys stated in a complaint to the US Securities and Exchange Commission (SEC) that Twitter had failed or refused to reply to several requests for information on fraudulent or spam accounts on the network. Twitter chairman Bret Taylor went to the microblogging site to announce that the company’s board of directors intends to take legal action to enforce the acquisition deal.

Elon Musk announced the cancellation of his $44 billion acquisition of Twitter Inc, citing the social media company’s failure to share information on false accounts on the network. Musk’s attorneys stated in a filing to the US Securities and Exchange Commission (SEC) that Twitter has failed or refused to reply to several requests for information on fraudulent or spam accounts on the site, which is critical to the company’s commercial success.

According to the petition, “Musk is canceling the merger deal because Twitter appears to have provided false and misleading assurances upon which Musk relied upon signing into the merger agreement.”

Twitter chairman Bret Taylor went to the microblogging site to announce that the company’s board of directors intends to take legal action to enforce the acquisition deal.

Taylor tweeted, “Twitter‘ board is determined to complete the transaction at the price and terms agreed upon with Musk.

We hope to succeed in the Delaware Court of Chancery.”

Musk will be required to pay a $1 billion break-up fee if the sale is not completed, according to the terms of the agreement.

Twitter Inc shares were down little more than 5% at the time of posting this story. The agreement was called off a day after the media reported, citing an unidentified source, that Musk’s team was preparing for a “change in direction,” implying that Musk was unable to determine the proportion of Twitter accounts that were not authentic despite being granted access to internal data.

Previously, Musk voiced reservations and even hinted that he would back out of the arrangement due to his concerns over an excess of phony accounts.

According to the SEC filing, “Twitter has failed to meet its contractual responsibilities. For roughly two months, Musk has sought data and information in order to “perform an impartial study of the frequency of bogus or spam accounts on Twitter’s network. This information is critical to Twitter’s business and financial performance and is required to complete the transactions contemplated by the merger agreement because it is required to ensure Twitter’s satisfaction of the closing conditions, to facilitate Musk’s financing and financial planning for the transaction, and to engage in business transition planning.”

According to the petition, Twitter either disregarded Musk’s demands, rejected them for unreasonable reasons, or purported to comply while providing Musk with insufficient or useless information.

Twitter allowed Musk access to its “firehose,” a collection of raw data on hundreds of millions of daily messages, last month.

“The Wedbush analyst Dan Ives said in an investor note, “Twitter soap opera is definitely drawing to a close over the next months as Musk decides whether to remain (at a reduced price) or exit.”

During the Qatar Economic Forum last month, Musk stated that his Twitter acquisition was hampered by “quite big” concerns about the amount of fraudulent users on the social network.

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