Elon Musk Tries to Wriggle Out of Buying Twitter, Announces He’s Backing Out of Agreement He Signed

Elon Musk’s legal team sent Twitter a letter on Friday informing the company he is withdrawing from an agreement he signed to purchase the company.

Per the agreement signed in April, Musk is contractually obligated to buy Twitter at $54.20 a share, or around $44 billion. Shares in Twitter stock closed on Friday $36.81.

In recent weeks, Musk has publicly raised doubts about the number of bot accounts on the platform, which Twitter estimates to be around five percent of accounts, though the company said that number could be higher.

Musk has asked for and received some information from Twitter regarding bots, but the letter says he is dissatisfied with the response.

“Twitter has failed or refused to provide this information,” a letter from Musk’s attorney says. “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”

However, as Bloomberg’s Matt Levine has pointed out numerous times, simply announcing he’s backing out doesn’t necessarily make it so.

the reason that elon musk can’t get out of the deal over the bots thing is not that he “waived due diligence.” it’s that he SIGNED A BINDING AGREEMENT TO BUY TWITTER, and that agreement does not have any outs for “i think there are too many bots.”

— Matt Levine (@matt_levine) July 7, 2022

According to a recent report, Musk and Twitter were in negotiations to lower the price tag. While the deal requires Musk to buy at $54.20 a share, indications were that shareholders were willing to cash out at a price around $40 a share rather than engage in a prolonged legal battle with Musk.

That battle is now all but guaranteed to happen, as Twitter’s board of directors will likely use every recourse at its disposal in an attempt to get Musk to meet his obligation.

UPDATE:

Bret Taylor, the chair of Twitter’s board has tweeted the board will pursue legal action, saying it is “committed to closing the transaction.”

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

This is a developing story.