Tesla (TSLA) CEO Elon Musk scrapped his $42 billion takeover deal to buy Twitter (TWTR), claiming the information provided by the social media giant was false and misleading, prompting the company to threaten to sue to enforce the agreement.
- Musk, in a filing with the U.S. Securities and Exchange Commission, claimed Twitter was in material breach of multiple provisions of the deal and had apparently made false and misleading representations that Musk had relied upon.
- Musk also claimed the company is likely to suffer a ” company material adverse effect.”
- In May, Musk put the transaction on hold until he could verify that spam or fake accounts represent fewer than 5% of the total users on Twitter.
- In today’s announcement, Musk’s attorney’s made it clear that the billionaire believes the actual number of bots making up total users is much higher than 5%.
- “Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU (monetizable daily active user) count is wildly higher than 5%.”
- Twitter’s board responded, saying it was “confident” in the agreement and that it intends to close the deal at the agreed-upon $54.20 per share price:
- “We are committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plan to pursue legal action to enforce the merger agreement,” the board said in its statement. “We are confident we will prevail in the Delaware Court of Chancery.”