Elon Musk, the head of Tesla and SpaceX, ended this Friday the agreement to buy Twitter for 44.000 millions of dollars.
In a letter published by the SEC, his lawyers assure that Twitter has not respected the commitments assumed in the agreement, in particular by not providing all the requested information on the number of inauthentic and spam accounts.
Via Bret Taylor, chairman of the microblogging platform's board of directors, Twitter says it is 'committed to completing the transaction' at the agreed price and terms” and plans to take legal action to enforce the merger agreement. "We are convinced that we will prevail in the Delaware Court of Chancery," Twitter hammers.
Musk rocked the world of social media at the beginning of this year with its unprecedented attempt to privatize the company, arguing that he could grow Twitter and make it more open and, in his opinion, politically neutral. He said he would allow former President Donald Trump back on the platform and argued that Twitter's content moderation practices violate freedom of expression. Musk gave up his right to take a closer look at the company's finances when he signed the deal.
But soon after, doubts arose as to whether he would go all the way. A global tech stock selloff sharply reduced his personal net worth, which he had leveraged to secure the loan commitments he needed to buy Twitter.
Musk's enthusiasm for going ahead with the deal has been in doubt since at least May, when he said the deal was "on hold" until he could verify whether Twitter's claim that less than 5% of accounts are bots or spam was correct. He accused Twitter of withholding information, while the company said he was acting in good faith and providing everything required by the terms of the agreement.
Begining of June, Elon Musk warned that he could retract his offer of $44 billion to acquire Twitter if the social network did not provide unwanted accounts and false data. In a letter to Twitter, the billionaire reiterated his request for details of the bot accounts, saying he reserved all rights to terminate the merger as the company was in "clear material breach" of its obligations by failing to provide him with the information. :
“Mr. Musk disagrees with the characterizations in the June 1 Twitter letter. Twitter has, in effect, refused to provide the information that Musk has repeatedly requested since May 9, 2022 to help him assess spam and fake accounts on the company's platform. Twitter's latest offer to simply provide additional details about the company's own testing methodologies, whether through written documents or verbal explanations, amounts to denying Musk's data requests. Twitter's effort to characterize it differently is just an attempt to obfuscate and confuse the issue. Mr. Musk has made it clear that he does not think the company's lax testing methodologies are adequate. therefore, he had to perform his own analysis on it. The data he requested is necessary for this.
After a week-long standoff, Twitter's board decided to honor Elon Musk's internal data requests by offering access to his entire fire hose.
On his account Musk mentions that Twitter has not provided the requested information for almost two months, despite his repeated and detailed clarifications aimed at simplifying the identification, collection and disclosure of the most relevant information sought.
Although Twitter provided certain information, that information is accompanied by artificial strings, usage limitations, or other formatting characteristics, which made some of the information of little use to Musk and his advisers.
For example, when Twitter finally provided access to the eight "*APIs*" for developers that Musk first explicitly requested in the May 25 letter, those APIs contained a lower speed limit than what Twitter provides to its corporate customers. bigger.
In addition, these APIs contained an artificial "limit" on the number of requests that Musk and his team can run regardless of the speed limit, an issue that initially prevented Musk and his advisers from performing data analysis within a reasonable timeframe.
Musk raised this issue as soon as he was aware of it, in the first paragraph of the June 29 letter:
"Our data experts have just informed us that Twitter has placed an artificial limit on the amount of research our experts can do with this data."
Which now prevents Musk and his team from doing their analysis. That limit was only removed on July 6, after Musk called for it to be removed a second time.
Based on the negative aforementioned of providing the information requested by Musk from May 9, 2022, Twitter breaches Sections 6.4 and 6.11 of the Merger Agreement.
Despite public speculation on this point, Musk did not waive his right to review Twitter data and information simply because he chose not to investigate such data and information before entering into the merger agreement with Twitter.
In fact, he negotiated access and information rights as part of the merger agreement precisely so that he could review Twitter's business data and material before financing and closing the deal.
By ending his commitment to purchase Twitter, the businessman exposes himself to important legal proceedings. Both parties have agreed to pay severance payments of up to $XNUMX billion in certain circumstances.