Elon Musk, Tesla CEO, sent a letter to Twitter Friday stating that he had reneged on the deal to purchase Twitter for $44Billion. Musk requested data and information two months ago to make an independent assessment of the number of spam accounts on Twitter. ”
Elon Musk has ended his $44 billion Twitter contract after months of negotiations with Twitter’s board. It was no surprise, considering the back and forth negotiations. The SEC published the letter Musk’s lawyers sent Vijaya Gadde (Twitter Chief Legal Officer) stating that Twitter had failed to meet its obligations to reveal the true number of fake accounts.
Skadden Arps Slate Meagher & Flom LLP wrote that Musk’s legal representatives had written in the letter saying that “Twitter hadn’t complied with” its contractual obligations. It has been two months since Musk requested data to “make an independent assessment of the number spam accounts or fake accounts on Twitter.”
This letter stated that the information was vital to Twitter’s financial performance and business. It is also required to close the merger transactions. It is necessary to ensure that Twitter meets all closing conditions, facilitate Musk’s financing and financial planning, as well as to engage in transition planning for Twitter. ”
However, Musk was granted access the Twitter “firehose user data” several weeks before the deal was cancelled. Musk believes it is closer to 20 percent.
Micah Schaffer, a social media consultant, focuses on safety and trust issues. He previously worked for Snap Inc. and YouTube. Musk’s data transfer was, according to him, more of a “shut up-and-go-away” deal than a major concession.
Schaffer noted that Musk, despite having access to a number of data scientists to review the information on Twitter’s website, “would need to duplicate their [Twitter] processes somehow to credibly challenge their behavior.” ”
Morgan Stanley’s lawyers, and Musk’s advisors, claim they have been asking for “critical” information about Twitter’s daily users. They didn’t receive a reply.
Musk may now have to sell the company, or pay a $1B severance payment.
According to the company, the Twitter Board is committed to closing the deal at the agreed price and terms with Musk. It plans to also take legal action to enforce its merger agreement.