Elon Musk, the chief executive officer of Tesla and the world’s richest person, said on Friday he was terminating his $44 billion deal to buy Twitter because the social media company had failed to provide information about fake accounts.
Shares of Twitter were down 7% in extended trading. Musk had offered $54.20 per share in April.
Twitter’s chairman, Bret Taylor, 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 Mr. Musk…,” he wrote.
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 Mr. Musk relied when entering into the Merger Agreement,” the filing said.
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.
The terms of the deal require Musk to pay a $1 billion break-up fee if he does not complete the transaction.
Musk had threatened to halt the deal unless the company showed proof that spam and bot accounts were fewer than 5% of users who see advertising on the social media service.
The decision is likely to result in a long protracted legal tussle between the billionaire and the 16-year-old San Francisco-based company.