Tesla CEO Elon Musk is officially pulling out of his plans to acquire Twitter for $44 billion USD (about $60 billion CAD).
In a letter to the U.S.’ Securities and Exchange Commission (SEC), Musk’s legal team claimed that Twitter is “in material breach” of its contractual obligations in the deal.
“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,’” reads the letter. “Twitter has failed or refused to provide this information.”
Musk previously said he didn’t believe Twitter’s “lax testing methodologies” and alleged that the company was refusing to provide him with accurate data. As a result, he threatened to pull out of the deal in June, although Twitter quickly said it would give him the information he seeks. It’s unclear what happened behind-the-scenes in the month since, but Musk clearly isn’t satisfied.
It should be noted, however, that it’s unclear whether Musk has legitimate legal ground to withdraw from the deal. To start, he did agree to pay $1 billion USD (about $1.3 billion CAD) — a small sum for the world’s richest man. More importantly, though, it remains to be seen whether Musk will be legally bound to honour the agreement. To that point, Twitter chairman Bret Taylor has said that the company is “committed” to seeing the deal through.
“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,” said Taylor in a July 8th tweet.
Musk and Twitter first announced the acquisition on April 25th, following criticisms of the platform for not maintaining “free speech.” Specifically, Musk has questioned whether Twitter adheres to the “principle” that “free speech is essential to a functioning democracy.” During this time, Musk has also been contesting a 2018 court ruling that requires him to vet any tweets that could affect Tesla stock price by his lawyers.
At the time of writing, Musk — a prominent figure on Twitter with over 100 million followers — has not yet tweeted about his desire to pull out of the deal.