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.
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.
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.
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.
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.
Elon Musk has terminated his deal to buy Twitter. But perhaps he’s got something up his sleeve.
— Steven Crowder (@scrowder) July 8, 2022
I would pay NFL prices to attend the Elon Musk/Twitter trial in Delaware. Twitter bringing out genetically engineered M&A lawyers made from Henry Kravis’ sperm, Elon saying he shouldn’t have to pay them penalties using a printed out ceiling cat memes…trial of the millennium
— Never Back Down #BackBoris (@ByYourLogic) July 8, 2022
Elon Musk won’t spend $44 billion to buy Twitter.
Because he’s a lying broke ass pansy little bitch.
— David Leavitt (@David_Leavitt) July 8, 2022
When Elon Musk launched his effort to buy Twitter on April 15, the share price was $54.20
Today it’s $34.05.
No wonder the board is suing him to complete the original deal.
— Tom Harrington (@cbctom) July 8, 2022
Elon musk is terminating his agreement to buy Twitter: So basically Twitter has a huge amount of spam accounts —way more than they let on — and has gotten busted for it!!!
As I said weeks ago spam accounts are probably 50% not 5% of Twitter users. A— Donald Trump Jr. (@DonaldJTrumpJr) July 8, 2022
READ MORE: MUSK FACES $1 BILLION FINE – Deal to Acquire Twitter Falling Apart
So do stockholders now get to sue twitter for not engaging in the fiduciary responsibility to their investors to make this deal happen?
Exactly my thoughts… They just opened up a can of worms… I’m sure this will go to court.
I think we need to dive deeper here. Elon wanted a reaction of value. There is the earnings call on the 28th of July. This means the Twitter board have 20 days to recover the situation by giving Elon the exact data point he needs, i.e. how big is the mDAU error on spam/bots. Clearly, Elon has a business case that is built around this very metric. I analysed the impact of this metric on his investment thesis. If of interest, you are welcome to check out:
https://www.andremuscat.com/twitter-elon-the-impact-of-bots-spam-on-mdau-and-time-to-value/
He wants accurate information and Twitter is failing to provide it… Very shady. Twitter is lying.
Twitter could have been useful moving forward with substantive changes. They still operate as if its 10 years ago. Most of the world is not on Twitter and could care less about it, but the Blue Checkmarks act as if it is the biggest microphone in the world. Then they report on their own peers Tweets as if they have widespread impact.
Yep…. There’s a lot of shady business going on with Twitter… Whoever owns the company controls the narrative… so hopefully someone as “fair” as Musk will buy the company because right now it’s being run by progressive left who censor anyone who doesn’t say what they want…
Look at what happened to Jordan Peterson recently..
Are we living in America or North Korea?!!