Twitter falls after Elon Musk says company materially breached deal agreement (update)

Jun. 06, 2022 12:11 PM ETTwitter, Inc. (TWTR), TSLABy: Joshua Fineman, SA News Editor739 Comments

Elon Musk To Buy Twitter

Scott Olson/Getty Images News

Update 12:11pm: Updates shares, adds Twitter response.

Twitter (NYSE:TWTR) dropped 1.6% after Elon Musk said that the social media company has "materially breached" Twitter's obligations under the merger agreement due to Musk's requests for more information about spam accounts. Tesla (NASDAQ:TSLA) was largely unchanged.

Musk believes that Twitter's refusal to provide more details on the spam information is a breach of the merger pact. Musk assert that Twitter is actively "thwarting" his information rights on the deal.

Twitter said it plans to enforce the merger pact on the agreed upon terms, according to Bloomberg, which cited a statement from Twitter (TWTR). The social media company plans to cooperatively share info with Musk to consummate the deal on the agreed upon terms.

Musk originally agreed to purchase TWTR for $54.20 per share, though he has been complaining for weeks, often through tweets, that the social media company may be be misstating the number of spam accounts that it has. Musk has implied that he would like to renegotiate the buyout deal at a lower price. So far, the billionaire has largely pointed to doubt around fake and spam TWTR accounts.

"Based on Twitter’s behavior to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement," according to a letter from Musk's lawyers in a new 13D filing. "This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement."

Wedbush analyst Dan Ives tweeted that in his view Musk is now "looking to walk away" from the deal.

"Speaks to our thesis over past few weeks that spam/bot issue was going to be the “material breach” cited by Musk to try to get out of TWTR deal," Ives tweeted. "$1 billion breakup fee; Twitter Board will fight this clearly. Help remove a major overhang on Tesla; Twitter stock be under pressure."

Investors on Friday were pleased that the HSR waiting period for the company's planned $44 billion sale to Elon Musk had expired. The U.S. antitrust approval represented a step forward in Tesla (TSLA) CEO Musk's planned $54.20/share purchase of Twitter.

Last month, Venture capitalist Jim Breyer said Twitter intrinsic value is $25 to $30/share and that Musk Elon Musk "is paying too much for Twitter."

Recommended For You

Comments (739)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.