After a lot of back and forth, the deal between Elon Musk and Twitter came to an end. In a letter sent by one of his lawyers, the billionaire expressed his intention to close the transaction, which would involve $44 billion. The businessman says that the social network did not provide enough information about fake accounts on its platform.
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The letter was revealed by a filing with the SEC, the authority that regulates the US financial market. Writing to Twitter’s chief legal officer, attorney Mike Ringler accuses the company of “failing to meet its contractual obligations.” He further claims that the company did not give Musk the information the contract required.
“Twitter has sometimes ignored Mr. Musk; sometimes rejected for apparently unjustifiable reasons; sometimes he said he met the requirements and gave mr. Musk incomplete or unusable information,” the document reads.
In addition to the breach of contract, Ringler claims that Twitter violated the purchase agreement. According to the lawyer, the document contains “materially inaccurate information”.
Musk claims that Twitter has more spam accounts than the company claims. Twitter, in turn, says that it is not possible to make this account from only public data. In the analyses, a team of experts from the company reached the number of 5% of fakes.
In the letter, the lawyer says that all indications suggest that Twitter’s information about its mDAUs (acronym for “Monetizable Daily Active Users”) is false or materially misleading.
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Twitter shares fell 6% after the market closed. As Reuters points out , the shares are trading at a value 36% lower than the $54.20 that Musk agreed to pay in April.
Bret Taylor, chairman of Twitter’s board, wrote on the social network that the company is committed to closing the deal and intends to take legal action to make it happen. “We are confident that we will win in the Delaware Court of Chancery,” Taylor declared.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
The deal stipulates a $1 billion fine if Musk fails to complete the acquisition due to lack of financial resources or legal impediments. If the buyer himself gives up, however, the penalty does not apply.
From largest shareholder to (almost) owner
The telenovela of the purchase of Twitter by Elon Musk began in April, when the information became public that the CEO of Tesla and SpaceX had become the largest individual shareholder in the social network . Musk spent months buying millions of shares daily to get to that spot.
The company then offered the billionaire a seat on the board. Musk refused and formalized a proposal to buy 100% of the company’s shares for US$ 44 billion, with US$ 21 billion of its own resources.
At first, Twitter tried to refuse or, at least, make the offer difficult . This position did not last long, and the two parties closed the deal.
Less than a month later, however, the bot controversy erupted . Musk says he needs to know the exact amount of fake and spam accounts on the social network.
Twitter says that this number is no more than 5% of daily active monetizable users, but the entrepreneur doubts this data — for him, the number could reach 20%. Independent experts believe that between 9% and 15% of Twitter users are bots .