Social media giant, Twitter, says it would pursue legal action after Tesla Chief Executive Officer, Elon Musk informed the company’s board that he is terminating his $44 billion merger agreement.
Twitter chairman board of directors, Bret Taylor made the position known on Friday in response to Musk”s action.
He wrote that the social media platform 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.”
Musk said on Friday he was terminating the $44 billion deal for Twitter, saying that the social media company had failed to provide information about fake accounts on the platform.
His attorneys on Friday filed a letter with the SEC accusing Twitter of being in material breach of the transaction agreement. They wrote that the company, after repeated requests for data on its accounts, “has failed or refused to provide this information”
Musk’s attorneys wrote that “to the extent that Twitter has underrepresented the number of false or spam accounts on its platform, that may constitute a Company Material Adverse Effect under Section 7.2(b)(i) of the Merger Agreement. Mr. Musk is also examining the company’s recent financial performance and revised outlook, and is considering whether the company’s declining business prospects and financial outlook constitute a Company Material Adverse Effect giving Mr. Musk a separate and distinct basis for terminating the Merger Agreement.”
The Friday filing claimed that “Twitter is in material breach of multiple provisions of the buyout deal, and that the company appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement.”
“For nearly two months, Mr. Musk has sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,” Musk’s law firm Skadden Arps said in a letter to Twitter.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
In response, Taylor said the social-media giant is prepared to take Musk to court, adding that it has provided Musk with the information he has requested.
“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 tweeted Friday afternoon.
In the Friday filing, Musk acknowledged that Twitter has provided some information but said not as much as it gives its largest advertisers.
Musk’s move to sever the deal is not unexpected. He clinched the agreement in late April for $44 billion, or $54.20 a share just before markets plunged.
Twitter is trading at around $34 right now. Musk had declared as early as mid-May that the deal was “on hold”, citing lack of clarity around the number of bot, for robot, or fake accounts.
Twitter has steadfastly insisted that the billionaire Tesla founder is not legally entitled to call off the deal without a solid reason (and it doesn’t agree that spam account information is one) even if he’s willing to pay the $ billion breakup fee.