Elon Musk, Tesla’s chief executive and the world’s richest man, said on Friday he was ending his $44 billion deal to buy Twitter because the social media company violated multiple provisions of the merger agreement.
Twitter’s chairman, Brett Taylor, said on the microblogging platform that the board plans to take legal action to enforce the merger agreement.
“Twitter’s board is committed to closing the transaction at the price and terms agreed upon with Musk…” he wrote.
In a filing, Musk’s lawyers said Twitter has failed or refused to respond to multiple requests for information about fake or spam accounts on the platform, which is central to the company’s business performance.
“Twitter is in material breach of numerous provisions of this Agreement, appearing to have made false and misleading statements relied upon by Mr. Musk in entering into the Merger Agreement,” the filing said.
Musk also said he was stepping down because Twitter had laid off senior executives and a third of its talent acquisition team, violating Twitter’s obligation to “keep substantially intact the material components of its current business organization.”
A legal battle
Musk’s decision is likely to lead to prolonged litigation between the billionaire and the 16-year-old San Francisco-based company.
Contested mergers and acquisitions that end up in Delaware courts more often end up with the companies renegotiating deals or the acquirer paying the target a settlement to back out, rather than a judge ordering the transaction to be completed. This is because target companies often want to resolve the uncertainty surrounding their future and move on.