According to a letter that was written on Elon Musk’s behalf on Friday to the company’s top legal officer by a lawyer on his behalf, the billionaire has expressed a desire to back out of his agreement to purchase Twitter for $44 billion.
However, Bret Taylor, the chairman of Twitter’s board of directors, said that the firm is still dedicated to completing the acquisition at the price that was previously agreed upon and that it intends to take legal action in order to enforce the agreement. According to what Taylor wrote, “We are optimistic that we will succeed in the Delaware Court of Chancery.”
Shares of Twitter were trading almost 6 percent down after hours on Friday. Skadden Arps attorney Mike Ringler wrote the letter, which was made public in a filing with the Securities and Exchange Commission. In it, he made the accusation that “Twitter has not fulfilled its contractual duties.”
Ringler said that Twitter did not supply Musk with the necessary business information he wanted, despite the fact that this was a requirement of the contract, according to Ringler. Musk has said in the past that he wants to investigate Twitter’s assertions that about 5 percent of the company’s monetizable daily active users (modus) are spam accounts.
Ringler said that Twitter had either neglected or refused to deliver the requested information. “There have been occasions when Twitter has disregarded Mr. Musk’s demands, times when it has rejected them for reasons that seem to be unwarranted, and others when it has pretended to cooperate while delivering Mr. Musk material that is either partial or useless.”
Ringler also claimed in the letter that Twitter violated the merger agreement by allegedly including “materially incorrect claims.” This was one of the charges that were included in the letter. This allegation is based on Musk’s early investigation of spam accounts that are hosted on Twitter’s infrastructure. Twitter has said that it is not feasible to compute the number of spam accounts using just information that is publicly available and that instead, a team of professionals reviews the data in order to arrive at the 5 percent figure.
Ringer said that numerous of Twitter’s public statements on its monthly active users (modus) are either incorrect or materially deceptive, despite the fact that the investigation into these claims is still ongoing.
He also argued that Twitter violated its requirements under the agreement to acquire Musk’s authorization before altering its regular course of business by referring to recent layoffs at the firm. He based this allegation on the fact that the agreement was signed.
Despite the fact that Musk has now publicly said that he wants out of the contract, it is very unlikely that this drama is ended.
Should Musk breach the conditions of the agreement, he is obligated to pay a sum equal to one billion dollars. But Twitter may still try to hold Musk to the terms of the original pact or collect a larger payoff by suing him for walking away if they disagreed with his explanation and believed he should be able to get out of the contract.
Twitter has good cause to insist that Musk adheres to the restrictions he first agreed to. Since the board of directors declared that they had accepted his bid to acquire the firm for $54.20 per share, the stock price has dropped by a significant amount. On the day the news was made, the price of the stock at the close of trade was $51.70 per share. As of the closing of trading on Friday, a share of Twitter was worth $36.81.