Billionaire Elon Musk is OFFICIALLY terminating $44 billion deal to buy Twitter

Less than 3 months after reaching a deal to acquire Twitter, Musk is terminating the acquisition.

Twitter announced the deal to sell to Musk on April 25, saying he would take the company private by paying $54.20 per share in cash after a whirlwind courtship between the billionaire and the social media platform.

The stock is currently valued at $36.81.

Musk’s lawyer sent a letter to Twitter’s chief legal officer announcing the termination.

The letter said,

Mr. Musk and 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.

Patrick Pleul/Pool via AP

Musk Made His Requests to Twitter CLEAR:

“If there were ever any doubt as to the nature of these information requests, the May 25 Letter made clear that Mr. Musk’s goal was to understand how many of Twitter’s claimed mDAUs were, in fact, fake or spam accounts.

That letter noted that Items 1.03 to 1.13 of the diligence request list contain high-priority requests for enterprise data and other information intended to enable Mr. Musk and his advisors to make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform…” The letter then provided Twitter with a detailed list of requests to this effect.”

Musk continuously followed up with Twitter executives, requesting the incomplete information Twitter failed to provide…

“Since then, Mr. Musk has provided numerous additional follow-up requests, all aimed at filling the gaps in the incomplete information that Twitter provided in response to his broad requests for information relating to Twitter’s reported mDAU counts and reported estimates of false and spam accounts.

For example, in our letter to you dated June 29, 2022, we referenced Mr. Musk’s request in the May 25 Letter for “information that would allow him ‘to make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.’”

Twitter Provided Insufficient Data to Musk

Because Twitter, by its own admission, provided only incomplete data that was not sufficient to perform such an independent assessment the June 29 Letter “endeavored to be even more specific, and to reduce the burden of the [original] request,” by identifying a specific subset of high priority information, responsive to Mr. Musk’s prior requests, for Twitter to immediately make available.

AP Photo/Gregory Bull

Why Did Twitter Take so Long to Provide Data?

Mr. Musk sought the same information in letters dated June 6, 2022, June 17, 2022, and June 29, 2022. In each of these letters, Mr. Musk referenced his information rights under Section 6.4 of the Merger Agreement. Twitter has thus been on notice of the information sought by Mr. Musk—and the contractual bases for these requests—for two months.”

“For the past month, Mr. Musk has been clear that he views Twitter’s non-responsiveness as a material breach of the Merger Agreement giving him the right to terminate the Merger Agreement if uncured.”

“…Twitter was “refusing to comply with its obligations under the Merger Agreement. Thus, Mr. Musk has been clear about his requests, his right to seek such information, and his view regarding Twitter’s material breach of the Merger Agreement.

(AP Photo/Marcio Jose Sanchez, File)

Twitter did not comply with its obligations to seek and obtain consent before deviating from its obligation to conduct its business in the ordinary course and “preserve substantially intact the material components of its current business organization.”

“Twitter’s conduct in firing two key, high-ranking employees, its Revenue Product Lead and the General Manager of Consumer, as well as announcing on July 7 that it was laying off a third of its talent acquisition team, implicates the ordinary course provision.”

Twitter has also instituted a general hiring freeze which extends even to reconsideration of outstanding job offers. Moreover, three executives have resigned from Twitter since the Merger Agreement was signed: the Head of Data Science, the Vice President of Twitter Service, and a Vice President of Product Management for Health, Conversation, and Growth.

“The Company has not received the Parent’s consent for changes in the conduct of its business, including for the specific changes listed above. The Company’s actions, therefore, constitute a material breach of Section 6.1 of the Merger Agreement”

Due to the fact that Twitter failed to comply with the agreements between Musk and the corporation, Musk decided to terminate the deal.

Musk’s lawyer claims Twitter breached its obligations under the agreement to get Musk’s consent before changing its ordinary course of business, pointing to recent layoffs at the company.

While Musk is now officially seeking to walk away from the deal, this saga is likely far from over.

AP Photo/Susan Walsh,

Musk is Facing a $1 Billion Fine

Under the terms of the agreement, Musk agreed to pay $1 billion if he backs out. But Twitter could still seek to hold Musk to his original deal or get a bigger payout by suing him for walking away if they dispute that his reasoning should let him out of the contract.

Twitter did not respond to a request for comment.

 

READ MORE: MUSK FACES $1 BILLION FINE – Deal to Acquire Twitter Falling Apart

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