Elon Musk ends Twitter takeover

Tesla CEO Elon Musk announced on Friday that he was ending his $44 billion takeover bid on Twitter.

According to a letter from Skadden Arps attorney Mike Ringler in a Securities and Exchange Commission filing on Friday, Musk said his decision was due to Twitter's "violation" of several provisions of the merger agreement.

“Mr. Musk is terminating the merger agreement because Twitter is in material breach of several provisions of that agreement, appears to have made false and misleading statements that Mr. Musk relied on when entering into the merger agreement. Merger Agreement, and is likely to suffer a Material Adverse Corporate Effect (as that term is defined in the Merger Agreement),” the letter reads.

“While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors with all data and information that Mr. Musk requests” for reasonable business purposes related to completing the transaction ", Twitter failed to comply with its contractual obligations.

“For nearly two months, Mr. Musk researched the data and information needed to” make an independent assessment of the prevalence of fake or spam accounts on the Twitter platform.

"This information is fundamental to Twitter's business and financial performance and is necessary to complete the transactions contemplated by the merger agreement, as it is necessary to ensure Twitter's satisfaction of closing conditions, to facilitate financing and Mr. Musk's financial planning for the transaction and to engage in transition planning for the business. Twitter failed or refused to provide this information. Sometimes Twitter ignored Mr. Musk's requests, sometimes he rejected them for reasons that seem unjustified, and sometimes he pretended to comply with them while giving Mr. Musk incomplete or unusable information.

“Consequently, for all of these reasons, Mr. Musk hereby exercises the right of X Holdings I, Inc. to terminate the merger agreement and abandon the contemplated transaction,” said the attorney for Skadden Arps, Mike Ringler, in the letter.

On Friday, Twitter announced that its board planned to take legal action to enforce the merger agreement.

Mr. Musk would have to pay Twitter $1 billion if he backs out of the deal.

"Twitter's board of directors has agreed to complete the transaction at the price and terms agreed to with Mr. Musk and plans to take legal action to enforce the merger agreement. We are confident that we will prevail in the Delaware Court of Chancery,” Twitter Chairman Bret Taylor said in a tweet on Friday.

Mr. Musk currently owns 73,486,938 shares of Twitter, representing a 9.2% stake in the company, according to U.S. Securities and Exchange Commission (SEC) filing 13G.

READ ALSO: Elon Musk Secures $7 Billion To Fund Twitter Takeover

On April 14, Mr. Musk announced that he had offered to buy 100% of Twitter for $54.20 per share in cash.

After the completion of the sale of Twitter, the company would have gone private.

This is the largest social media acquisition ever, surpassing Microsoft's $26.2 billion takeover of Linkedin.

On May 5, Mr. Musk announced that he had secured $7 billion in new funds to fund the takeover of Twitter.

On May 13, however, Mr. Musk announced that he had ended his $44 billion takeover of Twitter.

Mr. Musk said he needed to address issues with the number of fake or spam accounts on the platform.

Twitter's share fell 6% to $34.58 on Friday after the termination announcement. That's 36% below the $54.20 per share that Musk agreed to buy Twitter in April.

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