Elon Musk, the CEO of Tesla, has filed a formal request to end his bid to acquire the social media site Twitter with the U.S. Securities and Exchange Commission (SEC). A buyout of $54.20 per share, or $44 billion, had been agreed to by Musk and the Twitter board.
In a letter, Musk’s legal team complained that Twitter had been unhelpful despite the Tesla CEO’s requests for vital information about the site’s users. Attorney Mike Ringler of Skadden Arps claimed in a letter that “Twitter has not complied with its contractual obligations.”
After the social media giant indicated in an SEC filing that less than 5% of its users are fraudulent accounts, Musk had wanted more information from Twitter. Musk has stated that he thinks Twitter’s estimates are wildly off.
“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,” the lawyer wrote.
“Twitter has not provided information that Mr. Musk has requested for nearly two months notwithstanding his repeated, detailed clarifications intended to simplify Twitter’s identification, collection, and disclosure of the most relevant information sought in Mr. Musk’s original requests,” Ringler added.
“While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors. For example, when Twitter finally provided access to the eight developer “APIs” first explicitly requested by Mr. Musk in the May 25 Letter, those APIs contained a rate limit lower than what Twitter provides to its largest enterprise customers,” he wrote.
Ringler also noted that Twitter had breached its merger agreement with Musk because of “materially inaccurate representations.” This is reportedly based on Musk’s own preliminary review of spam accounts on Twitter. The social media company, for its part, has maintained that it’s not possible to calculate spam accounts from solely public information.
“While this analysis remains ongoing, all indications suggest that several of Twitter’s public disclosures regarding its mDAUs are either false or materially misleading. 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,” Ringler wrote.
Ringler also stated that due to “materially inaccurate representations,” Twitter has broken the terms of its merger agreement with Musk. This is allegedly based on Musk’s initial examination of Twitter spam accounts. According to the social media business, it is impossible to determine spam accounts using only publicly available data.
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
Bret Taylor, the chairman of the Twitter board, responded to Musk’s filing by saying that Twitter was still dedicated to reaching an agreement with the CEO of Tesla. Taylor also emphasized that Twitter wants to complete Musk’s acquisition for the $44 billion agreed upon price.
“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,” Taylor wrote.