Elon Musk notifies SEC of Twitter deal termination
Elon Musk has through his lawyers notified the US Securities and Exchange Commission that he wants to terminate the $44 billion deal to acquire Twitter. The acquisition deal is backed by other investors including Larry Ellison, Andreessen Horowitz, Fidelity, Binance, and a Qatar investment firm among others.
Musk’s lawyers accused Twitter of alleged material breach of multiple provisions of the agreement and making false and misleading representations that might hurt Musk.
Musk had requested data on fake accounts on Twitter, which was part of the first quarter 2022 report the company released that showed it was less than 5 percent of all monetisable users on the microblogging platform.
Musk invoking Section 6.4 of the Merger Agreement said it 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.”
On Thursday, concerns emerged that Twitter cannot verify the spam and bots on its platform. This was after the social media giant during a media conference call explained that its spam account data and technology for blocking bots are “just fine”. Twitter, however, noted its commitment to close the transaction and enforce the merger agreement at the agreed price and terms.
In his letter to SEC, Musk claimed that Twitter has not complied with its contractual obligations.
“For nearly two months, Mr. 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” (our letter to you dated May 25, 2022 (the “May 25 Letter”)). This information is 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. Twitter has failed or refused to provide this information,” the letter read.