Elon Musk says he is terminating $44bn Twitter deal

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Elon Musk has notified Twitter that he intends to terminate his agreement to buy the social media group for $44bn, accusing it of disclosing “false and misleading” information about the number of fake and spam accounts.

Twitter’s chair, Bret Taylor, responded swiftly, saying the board was “committed to closing the transaction on the price and terms agreed upon with Mr Musk” and would pursue legal action to enforce the agreement. “We are confident we will prevail in the Delaware Court of Chancery,” he added.

In a filing on Friday, lawyers for the billionaire Tesla chief executive claimed Twitter was “in material breach of multiple provisions” of the sale agreement, and “appear[ed] to have made false and misleading representations”. The number of spam and fake accounts among its users was “wildly higher” than the 5 per cent estimated by Twitter, according to preliminary analysis by Musk’s advisers, the filing stated.

Separately, according to the filing, Musk is “considering” whether Twitter’s “declining business prospects” and financial outlook also violate the agreement.

The filing accused Twitter of failing to comply with its obligations to “conduct its business in the ordinary course” after chief executive Parag Agrawal declared a hiring freeze, fired two senior staffers and this week announced it was laying off a third of its talent acquisition team.

Twitter’s shares fell 8 per cent in after-hours trading.

Musk had previously said that Twitter’s failure to furnish information about fake accounts posed a problem for him to secure financing from banks that agreed to lend him the cash to compete the transaction. He has repeatedly indicated he was considering walking away from the deal, which he agreed in April.

Under the terms of the agreement Musk can terminate the deal by paying $1bn if he failed to secure the financing for the transaction. However, Twitter plans legal action, and US courts have historically sided with sellers when buyers try to terminate deals to discourage them from walking away on spurious pretexts.

Since Musk agreed to buy Twitter in April the valuations of tech companies have fallen sharply, making his acquisition of the social media company particularly expensive compared to other rivals. The share price of Snap, one of Twitter’s closest competitors, has dropped more than 65 per cent this year.

Musk secured financing from several prominent investors for his Twitter buyout, including Oracle co-founder Larry Ellison and Sequoia Capital, the venture capital group.

Musk sent shockwaves through Wall Street when he announced his bid to take over Twitter in a bid to bring free speech back to the platform. In an interview with the Financial Times, he said he would reverse the “morally wrong” ban on former president Donald Trump, which was imposed after the January 6 2021 attack on the US Capitol.

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