After announcing that he was looking to buy Twitter in order to reinstate freedom of speech on the platform, Elon Musk committed to the deal but started to have second thoughts about it after discovering the much larger number of so-called bot (fake, spam) accounts on the platform than he initially expected. Musk argued that probably around 20 percent of all Twitter accounts were fake, or more than four times more than what the platform claimed.
He then announced that he was pulling out of the deal, even agreeing to pay $1-billion to Twitter to allow him to walk away. However, it looks like Twitter may not be content with this agreement and is looking to force Musk to go through with the $44-billion takeover. According to the social media platform’s chairman Bret Taylor,
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.
On the other hand, in a recent statement submitted with the U.S. Securities & Exchange Commission, Musk’s legal team notes that the Twitter did not supply information about spam accounts in due time. The document states that
Mr. Musk and his financial advisors at Morgan Stanley have been requesting critical information from Twitter as far back as May 9, 2022.
Since then, Mr. Musk has provided numerous additional follow-up requests, all aimed at filling the gaps in the incomplete information that Twitter provided in response to his broad requests for information relating to Twitter’s reported mDAU counts and reported estimates of false and spam accounts.
In short, 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.
Elon Musk also sent a letter to the Securities and Exchange Commission (SEC) claiming that firing of Twitter general manager Kayvon Beykpour and Bruce Falck, the company’s revenue and product lead, along with other lower profile layoffs represented a breach of the merger agreement. At the same time, the SEC is investigating the Tesla founder for the timing of his disclosure that he was buying Twitter, as well as for possibly filing the wrong type of form needed for a takeover deal.
