Twitter takeover: Elon Musk withdraws
Elon Musk, Tesla CEO, has terminated his $44 billion quest to takeover Twitter, the giant micro blogging site.
In a letter by Skadden Arps attorney, Mike Ringler, to the Securities and Exchange Commission, Musk said he was opting out because Twitter allegedly breached of many provisions of the merger deal as well as making false and misleading representations.
According to the letter: “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).
“While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consummation of the transaction,” Twitter has not complied with its contractual obligations.
“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.
“This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business. 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.
“Accordingly, for all of these reasons, Mr. Musk hereby exercises X Holdings I, Inc.’s right to terminate the Merger Agreement and abandon the transaction contemplated,” Skadden Arps attorney Mike Ringler said in the letter.
However, the Twitter board has indicated it’s interest to institute a legal action to enforce the merger agreement.
Twitter’s chairman, Bret Taylor, tweeted on Friday: “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.”
Mr. Musk, who currently holds a 9.2 per cent stake or 73,486,938 shares of Twitter, would have completely taken over the company had the deal worth $54.20 per share sailed through.
The biggest social media deal would have made Twitter a privately owned company.
Following news of the termination,
Twitter’s share value on Friday plummeted by six per cent at $34.58 or 36 per cent below the $54.20 per share after Musk had agreed to buy Twitter in April.
Mr. Musk would cough out $1 billion in payment to Twitter for withdrawing from the takeover agreement.