Elon Musk, the world’s richest man, bought Twitter for $44 billion less than three months ago. He declared that the company possessed “tremendous potential.”
Mr. Musk has since changed his tune. He took shots at Twitter’s top executives. He sent out tweets mocking the company’s board of directors. He complained that there were too many spam accounts on the social media service and that he couldn’t get any answers. To express his displeasure, he tweeted a poop emoji.
On Friday, Mr. Musk attempted to back out of the acquisition entirely.
Mr. Musk stated in a regulatory filing prepared by his lawyers that he was terminating the Twitter deal due to a continuing disagreement about the number of spam accounts on the platform. He claimed that Twitter failed to provide the information required to calculate the number of those accounts, which the company claims is less than 5%, and that it appeared to make inaccurate statements.
According to the filing, “Twitter is in material breach of multiple provisions” of the deal agreement, and the company “appears to have made false and misleading representations.”
Mr. Musk’s action sets up what is likely to be a contentious and lengthy legal battle with Twitter. In April, the billionaire signed a legally binding agreement to buy the company for $54.20 per share, waiving due diligence to expedite the transaction. The terms included a $1 billion breakup fee if the agreement fell apart, as well as a clause that allows Twitter to sue Mr. Musk and force him to complete or pay for the deal as long as the debt financing he has secured remains intact.
The completion of a sale to Mr. Musk is critical for Twitter. For years, the company has struggled to grow, and its financial performance has been inconsistent. There is no other potential buyer, its advertising business is under pressure, and it recently slowed hiring and laid off some employees.
Twitter’s stock has dropped more than 20% since April, far below Mr. Musk’s offer to buy it. Accepting less than the original negotiated price may expose Twitter to shareholder litigation. In a sign of how much the company’s investors were counting on the deal, its shares fell 5% in after-hours trading on Friday after Mr. Musk revealed his desire to terminate it.