Twitter’s Board of Directors said on Friday, July 8, that they intend to close the transaction with Musk at $54.20 per share, and that they plan to pursue legal action to enforce the agreement, according to the Twitter chairman of the board Bret Taylor.
It is assumed that Musk’s filing will not put the end to the whole story, though mark the conclusion of high-stakes suspense over whether he would complete the deal, after a public spat with the company over the number of bots on the platform. According to the Musk’s lawyer, the share of fake Twitter accounts is much higher than 5%, as was claimed by the Twitter representatives in contact with the buyer.
This is why Elon didn’t buy twitter. pic.twitter.com/3emRGmjKfj— Maximus Decimus Meridius (@Most_Maximus) July 11, 2022
Musk’s lawyer cited concerns over Twitter’s estimates about how many of its daily users are fake or spam accounts as an issue Musk raised as a concern about the deal almost three weeks after he signed it.
Late on Friday, Elon Musk decided to resolve the debate by breaching his contract signed three months ago, and making a Delaware lawsuit inevitable, by announcing in a 13D filing that he is terminating his Twitter merger agreement, and claiming that “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.”
Now, it is supposed that either a judge will impose the original deal, an outcome which will likely take place after several years of lawsuits, or Musk will renegotiate the purchase price lower.
In the letter sent from Musk’s law firm, Skadden Arps, to Twitter’s general counsel, Vijaya Gadde, it is noted that “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,” so now Musk can terminate the agreement, as said.
“While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests ‘for any reasonable business purpose related to the consummation of the transaction,’ Twitter has not complied with its contractual obligations,” the letter states.
It is specified in the letter that for nearly two months, Musk has sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform”, which is the “fundamental to Twitter’s business and financial performance” information necessary to consummate the transactions contemplated by the Merger Agreement.
As further explained, Twitter has failed to provide this information, from time to time ignoring Musk’s requests or rejecting them “for reasons that appear to be unjustified,” or even claiming to comply “while giving Mr. Musk incomplete or unusable information.”
Among Musk’s requests are mentioned the information related to Twitter’s process for auditing the inclusion of spam and fake accounts, information related to Twitter’s process for identifying and suspending spam and fake accounts, materials related to Twitter’s financial condition and others.
It is also noted that even though Twitter has provided some information, that information has come “with strings attached”, using “limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors.”