Business & Economy

Musk backs out of Twitter deal; Twitter vows legal action

New York, Jul 8 (EFE).- Elon Musk is ending an agreement to purchase Twitter for $44 billion, according to a regulatory filing on Friday, but the online platform’s board said it is confident the courts will compel the world’s second-richest person to complete the transaction.

“Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement,” the mogul’s lawyers said in a letter to Twitter that was published by the United States Securities and Exchange Commission (SEC).

Twitter, according to the letter, has failed to provide Musk with the information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.”

The CEO of Tesla and SpaceX has made that accusation repeatedly, though Twitter has stuck to its assertion that the proportion of bogus accounts on its platform does not exceed 5 percent.

Musk also argued that Twitter violated the merger agreement by making certain personnel decisions without consulting him.

Twitter’s ostensible breaches of the agreement can be interpreted as leading to “material adverse effects,” which, in Musk’s view, invalidates the provision requiring him to pay Twitter $1 billion in the event he canceled the merger.

The firm’s response was unequivocal.

“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,” chairman Bret Taylor said.

The offer made in April by the billionaire – $54.20 per share – represents a significant premium over Twitter’s share price of $39.31 prior to Musk’s acquisition of 9 percent of the company.

Twitter shares fell 6 percent, to $34.58, Friday on the New York Stock Exchange following Musk’s announcement that he was pulling out of the deal.

The company’s market capitalization has dropped by 25 percent since the merger was agreed in April. EFE nqs/dr

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