Elon Musk Backs Out Of Twitter Deal Worth USD 44 Billion; Claims Fake Accounts As Reason

Elon Musk's Twitter drama seems to have a new twist in the tale. Musk is terminating the USD 44 billion offer to Twitter citing 'fake accounts' as the reason. He said that there was a 'material breach' of agreement as Twitter didn't provide enough data about the number of fake accounts on the platform.

Elon Musk Terminates Twitter Deal

Elon Musk further stated that information is fundamental to completing the merger/acquisition. Musk's lawyer, Mike Ringler, further told the media that they sought data on the fake accounts or spam on Twitter for nearly two months. But since there was no concrete data, Elon Musk decided to terminate the deal.

"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," Elon Musk's lawyers said in a letter to Twitter's board.

Musk's interest in Twitter has unfolded into a large drama in the tech world. Initially, Musk sought interest in Twitter as he felt the platform could do more in terms of free speech. He also believed he could add value to the business by getting rid of its spam bots. But it looks like the same spam bots are now the reason to end the Twitter deal.

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.

— Bret Taylor (@btaylor) July 8, 2022

Twitter Responds To Musk; Calls For Legal Action

Twitter responded soon after Musk's letter was published to Twitter's board. Bret Taylor, the Chairman at Twitter said that the board "is committed to closing the transaction on the price and terms agreed upon, and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery".

What's more, shares of Twitter fell by five percent after the letter was made public. The new value was well below what Musk had agreed to pay. At the same time, shares of Tesla climbed by 2.5 percent. Even after the market closed, Twitter's stock continued to drop whereas Tesla's continued to rise.

What Happens To Twitter Now?

This seems to be the multi-billion-dollar question right now! What happens to Twitter is still unclear at the moment. Spam or fake accounts are a huge concern for Twitter, which the platform claims to remove a million every day. Presently, legal action is expected, which could further drag the Twitter deal for a few more months.