Elon Musk is formally ending his $44 billion bid to buy Twitter.
In a fresh SEC filing on Friday, July 8, Twitter shared a letter it received from Elon Musk’s legal team indicating displeasure with the company’s offered information regarding the level of “spam and fake accounts” on its service.
“Mr. Musk is terminating the Merger Agreement because 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, and is likely to suffer a Company Material Adverse Effect,” Musk’s lawyers wrote in a letter to Twitter’s Chief Legal Officer Vijaya Gadde.
Musk points to his repeated claims that Twitter is likely misleading investors and users about the number of automated accounts on its platform, which the company has long estimated to be under 5 per cent.
Specifically, Elon Musk claims Twitter has not complied with its contractual obligations to provide him and his advisors with all data and information that he requests “for any reasonable business purpose related to the consummation of the transaction.
He also claims that for nearly two months, he has sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform”.
He maintained that the information was fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction with the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business.
He also claims Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.
Elon Musk also disclosed that his financial advisors at Morgan Stanley have been requesting critical information from Twitter as far back as May 9, 2022—and repeatedly since then—on the relationship between Twitter’s disclosed mDAU figures and the prevalence of false or spam accounts on the platform.
What Twitter is saying
Twitter responded swiftly, denying the claims made by Musk and stating that it will do anything within its power to follow through with the deal.
Twitter said its board was “committed to closing the transaction on the price and terms agreed upon with Mr. Musk and will seek legal action to conclude the transaction.
Elon Musk is expected to pay Twitter $1 billion if he walks away from the deal. However, this is subject to conditions in the agreement which Elon Musk believes does not require that he pays any money to Twitter.
