July 8 (R) – Elon Musk, the chief executive officer of Tesla (TSLA.O) and the richest person in the world, said on Friday he was canceling his $44 billion deal to buy Twitter (TWTR.N ) because the social media company failed to provide information about fake accounts.
Shares of Twitter fell 7% in extended trading. Musk offered $54.20 per share in April.
Twitter chairman Bret Taylor said on the microblogging platform that the board plans to take legal action to enforce the merger agreement.
“The Twitter board is committed to completing the transaction at the price and terms agreed with Mr. Musk…” he wrote.
In a filing, Musk’s attorneys said Twitter failed or refused to respond to multiple requests for information about fake or spam accounts on the platform, which is fundamental to the company’s business development.
“Twitter is in material breach of several terms of this Agreement and appears to have made false and misleading representations on which Mr. Musk relied in entering into the Merger Agreement,” the filing reads.
The announcement is another twist in a won’t-want saga, after the world’s richest person inked a $44 billion deal for Twitter in April, but then shelved the acquisition until the Social -Media company proved that spam bots account for less than 5% of all users.
The terms of the deal stipulate that Musk will have to pay a $1 billion termination fee if he doesn’t complete the transaction.
Musk had threatened to halt the deal unless the company showed proof that spam and bot accounts accounted for less than 5% of users seeing ads on the social media service.
The decision will likely lead to a lengthy legal battle between the billionaire and the 16-year-old San Francisco-based company.
Reporting by Greg Roumeliotis; Additional reporting by Chavi Mehta in Bengaluru; Edited by Sriraj Kalluvila, Anna Driver and Lisa Shumaker
Our standards: The Trust Principles.