Tech billionaire pulls back on Twitter purchase His lawyers point to allegedly incomplete information on the number of fake accounts, but the online service is sticking to the deal.
Tech billionaire Elon Musk has canceled his deal to buy Twitter. As a reason, his lawyers referred to allegedly insufficient information on the number of fake accounts, according to a statement published by the US Securities and Exchange Commission on Friday.
The company does not want to accept this and plans to go to court. After the announcement, Twitter shares fell by around six percent in after-hours trading.
Musk had publicly questioned the Twitter numbers for weeks, which observers interpreted as an attempt to at least push the price down. At his bid, the deal would be worth more than $44 billion, while Twitter was last worth around $28 billion on the stock exchange.
Musk has been trying since mid-May to address Twitter’s allegedly false estimates of the number of spam and fake accounts. He therefore already declared the takeover deal to be suspended. Musk’s lawyers said Twitter had failed for almost two months to provide Musk and his advisory staff with the data access they needed to verify fake account information. They describe this as a serious breach of the terms of the contract that the purchase agreement could be terminated.
Twitter has estimated — and has for some time — that the number of fake accounts is less than 5 percent. Musk doubted that – even after he had signed the acquisition agreement.
Twitter does not want to let Musk out of the purchase agreement. Board Chairman Bret Taylor said the company is committed to completing the sale at the price agreed with it and plans to take it to court. The company said it would schedule a shareholder vote to sell its Musk stake in the coming months.
Musk and Twitter have agreed to a $1 billion penalty if either party fails to go through with the deal. However, it is more about problems such as failed financing than about an about-face.
Musk offered shareholders $54.20 per share. That would be a good deal for them: Even before Musk’s announcement on Friday, the paper was only $ 36.81 from US trading. Observers had speculated that given the price difference, Musk was no longer willing to stick to the original bid.