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Elon Musk withdraws his deal to buy Twitter

Elon Musk is ending his $44 billion deal to buy Twitter, according to a filing the billionaire filed with the Securities and Exchange Commission on Friday.

Musk’s attorneys sent a letter to Twitter saying he was “terminating their merger agreement,” according to the filing. In the letter, Musk says he has the right to walk away from the deal because Twitter hasn’t given him enough information about the company’s business.

Musk’s lawyers accused Twitter of “failing or refusing to” release information that would help Musk and his team determine the true number of bots or spam accounts on the social media platform.

“At times Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that seem unwarranted, and sometimes it has pretended to comply while giving Mr. Musk incomplete or unusable information,” the statement said. letter.

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Twitter Chairman Bret Taylor tweeted on Friday that the company would be taking legal action against Musk.

“Twitter’s board of directors is committed to completing the transaction at the price and terms agreed to with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” he said. writing. “We are confident that we will prevail in the Delaware Court of Chancery.”

Legal experts said Musk couldn’t just walk away from the deal. His April deal to buy the company included a commitment to proceed with the acquisition unless there was a major change in the business, and legal experts say nothing has happened to achieve that. threshold. Musk has already threatened to scuttle the deal if Twitter doesn’t give it more data to run its own analysis on how many spambots it has, while Twitter said it can’t give out personal information about its users like their names, emails and IP addresses, which he uses to find his own bot numbers.

Musk did not immediately respond to requests for comment.

Read the letter filed by Musk’s lawyers seeking to end the $44 billion Twitter deal

In the letter, Musk accused Twitter of a material breach of the terms of the agreement, making “false and misleading” statements and also cited the likelihood of a “material adverse effect”, a material change that would affect the value of the company.

“In short, Twitter has not provided the information requested by Mr. Musk for nearly two months despite his repeated and detailed clarifications intended to simplify Twitter’s identification, collection and disclosure of the most relevant information sought in the Mr. Musk’s initial requests,” the letter said.

In the letter, Musk also cited the company’s finances as a potential reason to pull out of the deal, citing the company’s “diminishing business and financial prospects” as a separate reason for ending the deal. ‘OK.

Musk argued in the letter to the company that Twitter broke its agreement not to materially change its business after signing the agreement by firing two senior executives in May and making layoffs to its recruiting team in July. . Musk said he didn’t waive the right to do due diligence when he signed the deal and expected Twitter to provide more information.

Legal experts said that when he signed the deal, he agreed to buy the business as is.

Musk shook up the social media world in April when he agreed to buy Twitter for $44 billion. He assembled a large group of co-investors and leveraged his personal wealth to secure the debt necessary to close the deal. But shortly after his takeover announcement, a global sell-off in tech stocks eroded Musk’s net worth, while making his purchase price of $54 per share look like a serious overvaluation of Twitter.

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Musky skeptics said he made up the bot argument simply to find a reason to get out of what he now considered a bad deal. Musk himself was aware of Twitter’s spam problem and mentioned it as one of the reasons he wanted to buy the company in the first place.

Wall Street has been skeptical of Musk completing the deal for months. Twitter’s stock price is around $37 today, down nearly 30% from the $52 traded the day it announced its acquisition.

The filing came after the Washington Post reported on Thursday that the deal was in serious jeopardy, with one of the co-investors not hearing from Musk’s team for weeks, according to people familiar with the situation. who spoke on condition of anonymity to discuss sensitive issues. .

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