Tesla chief Elon Musk has pulled the plug on the $44 billion Twitter deal because the social media company failed to provide information about fake accounts, reported news agency Reuters. Twitter shares declined 7 per cent in extended trading on Friday. Musk had offered $54.20 per share in April.
Responding to the development, Twitter's chairman, Bret Taylo said on the micro-blogging platform that the board planned to pursue legal action to enforce the merger agreement. "The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Musk...," he wrote.
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Clarifying its position in a filing, Musk's lawyers said Twitter had failed or refused to respond to multiple requests for information on fake or spam accounts on the platform, which is fundamental to the company's business performance.
"Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Musk relied when entering into the Merger Agreement," the filing noted.
Going by the terms of the deal, Musk would be required to pay a $1 billion break-up fee on failing to complete the transaction.
Earlier Musk had threatened to terminate the deal if the company fails to show proof that spam and bot accounts were fewer than 5 per cent of users who see advertising on the social media service.
The announcement is another twist in a will-he-won't-he saga after the world's richest person clinched a $44 billion deal for Twitter in April but then put the buyout on hold until the social media company proved that spam bots account for less than 5% of its total users.