Billionaire Wants To End His $44 Billion Deal To Buy Elon Musk Twitteraccording to a Letter The company’s chief legal officer was sent on Friday by a lawyer on his behalf.
But Twitter’s board chairman Brett Taylor said the company is still committed to closing the deal at the agreed-upon price and plans to take legal action to enforce the agreement.
“We are confident we will win in the Delaware Court of Chancery,” Taylor wrote.
Twitter shares fell nearly 6% after hours on Friday.
In the letter, disclosed in a Securities and Exchange Commission filing, Skaden Arps attorney Mike Ringler alleged that “Twitter has not complied with its contractual obligations.”
Ringler claimed that Twitter did not provide Musk with the relevant business information he requested, as Ringler said the contract would require. Musk previously said he wanted to assess Twitter’s claims that about 5% of its monetizable daily active users (MDAUs) are spam accounts.
“Twitter has failed or declined to provide this information,” Ringler claimed. “Sometimes Twitter has ignored Mr Musk’s requests, sometimes it has denied them for reasons that seem inappropriate, and sometimes it has complied by giving Mr Musk incomplete or unhelpful information. claims.”
Ringler also alleged in the letter that Twitter violated the merger agreement because it allegedly contained “materially incorrect representations.” The allegation is based on Musk’s own initial review of spam accounts on Twitter’s platform. Twitter has said that it is not possible to count spam accounts from public information alone and a team of experts reviews it to reach the 5% figure.
“While this analysis is ongoing, all indications suggest that many of the public disclosures about Twitter’s MDAU are either false or materially misleading,” Ringer alleged.
He also claimed that Twitter violated its obligations under the agreement to obtain Musk’s consent before changing its normal business, alluding to recent layoffs at the company.
While Musk is now officially trying to walk away from the deal, that saga is likely to be over.
Under the terms of the agreement, Musk agreed to pay $1 billion upon retraction. But as the chairman of Twitter’s board indicated they would do so, the company could seek to sue Musk for his original deal if they dispute that his reasoning should kick him out of the contract.
Twitter has reason to try to put Musk on his original terms. The stock declined significantly after the board announced that it had accepted its offer to buy the company at $54.20 per share. On the day of that announcement, the stock ended the trading day at $51.70 per share. Shares of Twitter were at $36.81 as of Friday’s market close.