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Elon Musk has filed a motion with the Securities and Exchange Commission (SEC) to walk away from his $44 billion deal to acquire Twitter.
Skadden Arps lawyer Mike Ringler claimed in the letter disclosed in an SEC filing that “Twitter has not complied with its contractual duties.”
Ringler alleged that Twitter failed to provide the pertinent business information Musk wanted as required by the contract.
Musk previously declared that he was interested in evaluating Twitter’s assertions that 5% of its monetizable daily active users (mDAUs) are spam accounts.
Read here: Elon Musk puts Twitter deal on hold due to fake accounts (commsroom.co)
Ringler said, “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
Additionally, Ringler said in the letter that Twitter violated the merger agreement’s terms because it makes “materially incorrect claims.”
Musk’s own preliminary examination of spam accounts on Twitter’s platform is the basis of this accusation.
Read here: Elon Musk’s ‘unresolved’ issues, plans on Twitter acquisition (commsroom.co)
Ringer alleged, “While this analysis remains ongoing, all indications suggest that several of Twitter’s public disclosures regarding its mDAUs are either false or materially misleading.”
He added, “Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement.”
“In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.”
Ringer also cited recent Twitter layoffs as evidence that Twitter had violated the agreement’s requirement that it obtain Musk’s approval before making any changes to its regular course of business.
Read here: Elon Musk threatens to pull out Twitter takeover bid (commsroom.co)
But it is not going to be an easy walk for Musk as he has agreed to pay $1 billion if he backs out of the deal.
Twitter claims it is impossible to compute spam accounts using only publicly available data.
The bird app said that a review by a team of specialists is needed to arrive at the 5% estimate.
In addition, Twitter board chair Bret Taylor asserted that the firm is still committed to consummating the transaction at the agreed-upon price and intends to take legal action to enforce the contract.
Taylor said, “We are certain we will succeed in the Delaware Court of Chancery.”
As Taylor pointed out, if the business disagrees with Musk’s justifications, it may attempt to enforce Musk’s original agreement by suing him for breach of contract.
Source: CNBC
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
