SAN FRANCISCO—After Elon Musk sent a letter to the Securities and Exchange Commission “terminating” the $44 billion acquisition of Twitter on July 8, Twitter’s chairman responded with a tweet saying the company plans to sue Musk, setting up what may become a lengthy legal battle over the affair.
Musk announced plans to acquire Twitter for $44 billion in April but since that time tensions have grown between Twitter and Musk amid growing signs that Musk was looking for a way out of the deal.
Elon Musk’s lawyers sent a letter to the Securities & Exchange Commission on Friday, July 8, saying that “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 from Mike Ringler at the law firm of Skadden, Arps, Slate, Meagher & Flom LLP on behalf of Musk’s X Holdings, complained that “[fo]or 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’” and that “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.”
Under the proposed merger, Musk would have to pay Twitter $1 billion if he backs out of the deal but Twitter seems intent on suing Musk to force the deal to be completed.
In a tweet, Twitter chairman Bret Taylor said: “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.”
Twitter’s stock has declined from a peak of $51.70 on April 25 to $33.79 at 11:30 a.m. ET on July 11.
