Tesla CEO Elon Musk has announced that he has terminated his contract to acquire Twitter, a social networking service (SNS) company. Twitter plans to take legal action.
According to the Wall Street Journal (WSJ) and CNBC on the 8th (local time), Musk submitted a letter to the securities regulator stating that a serious violation of the terms of the acquisition had occurred, terminating the Twitter acquisition contract.
This is because Twitter was required to provide information and data about spam accounts, but did not comply, and did not seek consent when changing business conduct, such as firing an employee.
Musk’s attorneys’ letter to securities regulators included “Twitter in grave violation of the terms of the agreement” and “made false and misleading statements.”
Twitter is likely to take legal action. “The board plans to take legal action to get the deal at the originally agreed price and terms,” said Twitter Board Chairman Brett Taylor.
In April, Musk announced his intention to acquire Twitter for $44 billion. However, fewer than 5% of accounts on Twitter have maintained that the deal will not progress unless they show public evidence that they are fake or spam.
Musk has been active on Twitter for a long time and has raised concerns about spam accounts. Back in April, he stated that he would “kill or die trying to defeat a spambot.”
Twitter has told the Securities and Exchange Commission (SEC) for years that it has estimated that less than 5% of all accounts are fake. In response, Musk received permission from Twitter to access account information data and has been investigating.
If Musk withdraws from the acquisition of Twitter, he will face a huge penalty of 1 billion dollars (about 1.26 trillion won).
Twitter’s share price has fallen more than 6% in after-hours trading since Musk’s contract was announced.