Elon Musk, the founder of Tesla and SpaceX, has disclosed that he’s pulling out of a $44 billion deal to buy Twitter.
In a letter sent by his lawyer, Musk stated that Twitter breached multiple parts of the merger agreement by failing to provide more information about how it estimates the number of spam accounts on its platform.
The social media platform has reported that in the first quarter, fewer than 5% of Twitter’s 229 million daily users were fake or spam-focused, but Musk says that number might not be accurate.
“This information is fundamental to Twitter’s business and financial performance,” reads the letter to Twitter from Musk lawyer Mike Ringler. The letter also said that Twitter “appears to have made false and misleading representations.”
Bret Taylor, chairman of Twitter’s board of directors, tweeted that the company still intends to close the 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,” Taylor tweeted. “We are confident we will prevail in the Delaware Court of Chancery.”
The letter also outlines other information Musk says Twitter hasn’t handed over, including information about the company’s financial conditions and more details about how Twitter calculates daily users who can see ads. The letter says that Twitter has provided Musk with some data, but it calls some of the information “minimally useful.”
Musk also alleges that an early analysis suggests some of Twitter’s public disclosures of daily users are “either false or materially misleading.” The letter further alleges Twitter breached another part of the agreement that said the company had to seek and obtain consent before straying from “its obligation to conduct its business in the ordinary course,” after the social network fired key executives, laid off staff and froze hiring.
The decision to terminate the deal caps a tumultuous period for Twitter, which found itself in the crosshairs after Musk revealed a roughly 9% stake in the company in early April. Musk appeared on the verge of joining Twitter’s board of directors but pulled out before proposing to buy the entire company and take it private. The board tepidly accepted Musk’s offer after he cobbled together highly leveraged financing for the deal.
Musk, the world’s richest person, said he wanted to acquire Twitter because he believes the company no longer adheres to the principles of free speech, a term he’s used both loosely and often.
