Elon Musk, Tesla CEO, has backed out of his $44 billion Twitter takeover deal, setting the stage for an epic court battle over a billion-dollar breakup fee and more.
This is according to a letter sent by a lawyer on Musk’s behalf to Twitter’s Chief Legal Officer on Friday.
In the letter, disclosed in a Securities and Exchange Commission filing, Skadden Arps attorney, Mike Ringler, said Tesla’s Chief Executive Officer was exercising his right to terminate the merger agreement and abandon the transaction.
According to the letter, Musk said his decision was due to Twitter’s “breach” of multiple provisions of that agreement. He also accused the company of “misleading” statements about the number of fake accounts.
“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 (as that term is defined in the Merger Agreement),” the letter said.
Musk’s decision to terminate the takeover deal might not come as a surprise to many. The billionaire, who had offered to buy Twitter for $43 billion on April 14, 2022, in a bid to privatise the microblogging platform and champion free speech, had on May 13 announced that he has halted the business deal, stressing that he needed to resolve concerns over the number of fake or spam accounts on the platform.
If he walks away from the deal, Musk is expected to pay Twitter $1 billion because he had agreed to it in the original agreement of the deal.
Meanwhile, Twitter’s board chairman, Bret Taylor has announced that the company is committed to seeing the deal through and plans to pursue legal action to enforce the merger agreement.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” Taylor said in a tweet on Friday.
