Elon Musk Walks Away From $44-Billion Twitter Deal, Twitter to Sue

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Tesla CEO Elon Musk has filed to exit from his multi-billion-dollar deal with Twitter over concerns about its spam bots, a Securities and Exchange Commission (SEC) filing shows.

โ€œWhile Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisers all data and information that Mr. Musk requests โ€˜for any reasonable business purpose related to the consummation of the transaction,โ€™ Twitter has not complied with its contractual obligations,โ€ reads an SEC filing dated July 8, 2022.

โ€œFor nearly two months, Mr. Musk has sought the data and information necessary to โ€˜make an independent assessment of the prevalence of fake or spam accounts on Twitterโ€™s platform,โ€™โ€ the filing continued.

Bot Accounts

Muskโ€™s lawyers argued that, despite multiple requests from the tech billionaire, Twitter failed to provide information on the pervasiveness of the social media platformโ€™s bot accounts that is โ€œfundamental to Twitterโ€™s business and financial performanceโ€ and is โ€œnecessary to consummate the transactions contemplated by the Merger Agreement.โ€

The information on fake and spam accounts on the platform, Muskโ€™s lawyers continued, โ€œis needed to ensure Twitterโ€™s satisfaction of the conditions to closing, to facilitate Mr. Muskโ€™s financing and financial planning for the transaction, and to engage in transition planning for the business.โ€

Additional information Musk has been requesting from Twitter includes the monetizable daily active usage or users (mDAU), Twitterโ€™s process for auditing the inclusion of spam and fake accounts in its mDAU count, the platformโ€™s methods for catching and suspending bot accounts, and materials showing Twitterโ€™s financial condition.

The SEC filing said Musk and his Morgan Stanley advisers have been requesting this information since May 9, but Twitter has โ€œfailed to provide much of the data and informationโ€ requested.

โ€œAccordingly, for all of these reasons, Mr. Musk hereby exercises X Holdings I, Inc.โ€™s right to terminate the Merger Agreement and abandon the transaction contemplated thereby, and this letter constitutes formal notice of X Holding I, Inc.โ€™s termination of the Merger Agreement pursuant to Section 8.1(d)(i) thereof,โ€ the SEC filing says. X Holdings is a company Musk formed to fund the purchase of the social media platform.

Byย Gary Bai

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