Elon Musk terminates Twitter deal

Elon Musk has withdrawn his $44 billion offer to purchase Twitter, citing numerous alleged violations of the merger agreement. After the richest person in the world chose to purchase Twitter in April, the disclosure might put an end to the prolonged process.

Musk claimed that the reason he pulled out of the deal was because Twitter had not given him enough information about the quantity of spam and fraudulent accounts.

"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," the filing said.

According to Twitter, legal action will be taken to enforce the contract. By choosing to withdraw, Musk would have to pay a $1 billion break-up fee and risk legal action.

He stated the agreement was "temporarily on hold" in May while he awaited information regarding the quantity of spam and phony Twitter accounts.

Attorney Mike Ringler of Skadden Arps claimed that Twitter had broken its contractual responsibilities in the letter, which was made public in a Securities and Exchange Commission filing.

According to Ringler, the contract would have required Twitter to give Musk the pertinent business information he wanted from them. Musk earlier declared that he was interested in evaluating Twitter's assertions that 5% of its monetizable daily active users (mDAUs) are spam profiles.

The social media giant has refused to deliver this information according to Ringler. Twitter has occasionally disregarded Musk's demands, rejected them for apparent unreasonable reasons, and pretended to cooperate while providing Musk with inaccurate or meaningless information, he added.

Spam accounts are made to disseminate information to a large audience and influence how they use the platform. Twitter announced on Thursday that it eliminates approximately 1 million spam accounts daily.

Musk added that another reason he was leaving Twitter was because the company had broken its promise to "preserve substantially intact the material components of its current business organization" by firing high-ranking executives and one-third of the talent acquisition team.

In extended trading, shares of Twitter were down 6% at $34.58. That is 36% less than the $54.20 per share Musk had agreed to pay to acquire Twitter in April.

 After Musk purchased stock in the firm in early April, Twitter's shares rose, protecting it from a severe stock market sell-off that battered rival social media companies. But later the price quickly started to decline as investors worried Musk might back out of the deal. After the bell on Friday, Twitter's stock price fell to its lowest level since March.

The revelation adds another chapter to the tale that began when Musk agreed to buy Twitter in April but postponed the transaction unless the social media company demonstrated that spam bots make up fewer than 5% of its overall user base.

Wedbush analyst Daniel Ives claimed that Musk's filing was bad press for Twitter. This is a catastrophe for Twitter and its Board since it will now have to fight Musk in a protracted legal battle to get the contract back and/or the $1 billion breakup fee, at the very least, he said in a note to clients.