Elon Musk tells Twitter he is killing the deal
source link: https://finance.yahoo.com/news/elon-musk-tells-twitter-killing-214804403.html
Go to the source link to view the article. You can view the picture content, updated content and better typesetting reading experience. If the link is broken, please click the button below to view the snapshot at that time.
Elon Musk tells Twitter he is killing the deal
Elon Musk is formally trying to end his bid to buy Twitter. After hinting heavily that he no longer wanted the company in tweets attacking Twitter over its bot calculations and an ominous story in The Washington Post this week reflecting his thinking, Musk's legal team is taking steps to terminate his $44 billion deal to buy Twitter.
"Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect," Musk's lawyers wrote in a letter to Twitter's Chief Legal Officer Vijaya Gadde.
Musk points to his unsubstantiated claims that Twitter is misleading investors and users about the number of fake accounts on its platform, which the company has long estimated to be under 5%. Musk had no apparent qualms with Twitter's bot count prior to inking the deal and actually mentioned that he planned to take on the platform's spam problem as the company's new owner.
It's widely assumed that Musk wants out because markets took a dive shortly after the terms of the deal were agreed upon, taking a solid chunk of his Tesla billions over the cliff too. The electric vehicle maker's shares halved between April and late May and haven't recovered since. By mid-May Twitter's own stock price had plunged to less than $40 a share — a considerable discount on the $54.20 per share Musk agreed to in late April.
Nonetheless, Musk's argument is essentially that Twitter misrepresented its monetizable daily active user counts and in doing so broke the terms of the deal:
Twitter is in breach of the Merger Agreement because the Merger Agreement appears to contain materially inaccurate representations. Specifically, in the Merger Agreement, Twitter represented that no documents that Twitter filed with the U.S. Securities and Exchange Commission since January 1, 2022, included any “untrue statement of a material fact” (Section 4.6(a)). Twitter has repeatedly made statements in such filings regarding the portion of its mDAUs that are false or spam, including statements that: “We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter,” and “After we determine an account is spam, malicious automation, or fake, we stop counting it in our mDAU, or other related metrics.” Mr. Musk relied on this representation in the Merger Agreement (and Twitter’s numerous public statements regarding false and spam accounts in its publicly filed SEC documents) when agreeing to enter into the Merger Agreement. Mr. Musk has the right to seek rescission of the Merger Agreement in the event these material representations are determined to be false.
Recommend
About Joyk
Aggregate valuable and interesting links.
Joyk means Joy of geeK