Elon Musk Seeks to Abandon $44 Billion Twitter Deal

The submitting caps almost two months of high-stakes suspense over Mr. Musk’s intentions, whereas establishing a potential authorized battle over what comes subsequent for the social-media platform.

Bret Taylor,

chairman of Twitter’s board of administrators, tweeted Friday afternoon that the board plans to pursue authorized motion to implement the deal on the value and phrases initially agreed upon.

“We’re assured we’ll prevail within the Delaware Court docket of Chancery,” Mr. Taylor tweeted.

Parag Agrawal,

Twitter’s chief govt, retweeted the message.

The corporate has stated repeatedly in current weeks that it was sharing data with Mr. Musk to consummate the deal as specified by the merger settlement—and that it supposed to shut the transaction and implement the settlement on the agreed value and phrases.

There aren’t any ensures Mr. Musk will be capable of stroll away from the deal solely, as Twitter is anticipated to problem his authorized arguments. Deal clashes typically finish in negotiated settlements that may embrace a value reduce or one-time funds.

Mr. Musk’s lawyer cited considerations over Twitter’s estimates about what number of of its every day customers are pretend or spam accounts as a problem Mr. Musk raised as a priority in regards to the deal virtually three weeks after he signed it.

Twitter shares fell greater than 7% in after-hours buying and selling Friday following the disclosure.

Mr. Musk’s choice to attempt to abandon a deal that he initiated—citing a problem he knew about earlier than agreeing to the transaction—reinforces the billionaire’s fame for unpredictability. It additionally leaves main questions on the way forward for Twitter, which Mr. Musk had pledged to rejuvenate, as the corporate and different social-media platforms take care of slowing development in digital promoting and broader financial uncertainty.

At a minimal, Mr. Musk may very well be on the hook for a $1 billion breakup charge, primarily based on the phrases of his April 25 acquisition settlement with Twitter. However the deal offers him solely restricted leeway to stroll away and pay solely that quantity—and it isn’t clear that his complaints about Twitter’s account knowledge qualify. The settlement offers Twitter the suitable to attempt to pressure him to observe by on the acquisition if he seeks to cancel it for different causes.

The deal’s destiny has been in query since Might 13, when Mr. Musk introduced on Twitter that he was quickly placing it “on maintain” pending extra details about the account points. Twitter has lengthy stated spam represents lower than 5% of its monetizable every day energetic customers, the first consumer quantity it discloses. Mr. Musk has instructed the determine may very well be nearer to twenty%, however hasn’t made clear how he arrived at that calculation.

Mr. Musk initially stated he was nonetheless dedicated to acquisition, however the Might tweet kicked off weeks of forwards and backwards as Mr. Musk repeatedly questioned and poked enjoyable at Twitter—typically by itself platform—and demanded the corporate furnish him extra knowledge to test its math. Twitter repeatedly stated it was complying together with his requests, and finally offered entry to its so-called hearth hose of tweets.

The corporate as not too long ago as July 7 defended its accounting, saying it sometimes removes a couple of million spam accounts every day whereas they’re being arrange or quickly after. It additionally stated it depends on closely-held personal consumer data to establish spam in a course of outsiders with out entry to that knowledge wouldn’t be capable of replicate.

Write to Meghan Bobrowsky at [email protected] and Cara Lombardo at [email protected]