Elon Musk is officially pulling out of his Twitter bid, arguing that the company failed to provide adequate data on the prevalence of bot and spam accounts. Musk’s lawyer sent the termination letter to Twitter’s Chief Legal Officer, Vijaya Gadde, on Friday evening. Color us shocked.
Unfortunately, this is only the beginning of what will be a messy, drawn-out public breakup; Twitter apparently isn’t letting Musk go without a fight. Shortly after the letter’s receipt, Twitter’s board chair, Bret Taylor, tweeted that the company will pursue legal action to force him into the merger as planned rather than settle for the previously agreed-upon $1 billion breakup fee. “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk,” Taylor wrote. Anyone else exhausted already?
It was only a matter of time before Musk made his desire to abandon the deal official. The Tesla and SpaceX CEO, long one of Twitter’s loudest users, has been griping about the presence of fake accounts essentially since the proposed $44 billion acquisition started to feel real (despite bots making up a significant portion of his own Twitter army). Just this week, Twitter held a briefing with executives in an effort to be transparent about the spam accounts issue, disclosing during the call that it removes one million such accounts every day. But Musk hasn’t let up.
In the letter, Musk’s lawyer, Mike Ringler, claims “Twitter is in material breach of multiple provisions” of the deal and “appears to have made false and misleading representations upon which Mr. Musk relied” for its closing. According to Musk’s team, Twitter failed to provide:
- Information related to Twitter’s process for auditing the inclusion of spam and fake accounts in mDAU [monetizable daily active usage]
- Information related to Twitter’s process for identifying and suspending spam and fake accounts
- Daily measures of mDAU for the past eight (8) quarters
- Board materials related to Twitter’s mDAU calculations
- Materials related to Twitter’s financial condition
The letter goes on to state:
This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business. Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.
Twitter, of course, disagrees. “We are confident we will prevail in the Delaware Court of Chancery,” Twitter’s chair concluded in his tweet.
And so it begins.
