Elon Musk terminated his agreement to buy Twitter Inc. on Friday, setting up a likely legal fight.
In a letter sent to Twitter’s
board on Friday, the Tesla Inc.
chief executive claimed that he was ending the agreement because Twitter would not shares requested information with him.
“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,” reads the letter, which was filed with the Securities and Exchange Commission.
Musk had agreed to purchase Twitter for $54.20 a share in April, after starting to build a position in the social-media company in January. Twitter shares closed Friday at $36.81, then fell more than 6% in after-hours trading after the letter was made public.
In agreeing to purchase the company, Musk waived due diligence and signed a contract to purchase the company for roughly $44 billion. Since that agreement, as stocks have declined sharply, Musk has asked for more information on bot accounts on the service.
The agreement includes a $1 billion breakup fee for either side, with predetermined reasons for breaking the contract. Twitter could take Musk to court seeking more than the $1 billion fee, up to and including the full $44 billion amount he promised to pay.
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