US billionaire Elon Musk on Saturday announced he will terminate the $44 billion offer to buy Twitter, accusing the social media giant of failing to give him accurate information about the number of fake accounts on the platform. Twitter fired back saying it is committed to closing the transaction “on the price and terms agreed upon” and vowed to sue Musk.
In a letter to Twitter’s board, Musk’s lawyer said his client had for nearly two months sought data to judge the prevalence of “fake or spam” accounts on the social media platform.“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Musk incomplete or unusable information,” the letter said.
The dispute is likely to play out at the Delaware Court of Chancery in the US state of Delaware where Twitter will need to prove that fake accounts comprise only 5% of all accounts on Twitter as it informed Musk in May.
Musk disputes this figure saying that the real number of bot accounts could be much higher. If Twitter prevails, Musk will have to pay $1 billion breakup fee. Musk also blamed Twitter for firing several high-ranking officials, breaking an agreement with Musk to preserve talent. More specifically, Musk’s lawyer alleged that Twitter broke the agreement when it fired its revenue product leader and general manager of consumers and laid off a third of its talent-acquisition team.
On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 that Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5% to $752.29.“This is a disaster scenario for Twitter and its board,” Wedbush analyst Dan Ives wrote in a note to investors.
“From the beginning, this was always a head-scratcher to go after Twitter at a $44 billion price tag for Musk and never made much sense to the Street, now it ends (for now) in a Twilight Zone ending with Twitter’s Board back against the wall and many on the Street scratching their head around what is next.”