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.

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

“For nearly two months, Mr. Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,’” the filing continued.

Bot Accounts

Musk’s lawyers argued that, despite multiple requests from the tech billionaire, Twitter failed to provide information on the pervasiveness of the social media platform’s bot accounts that is “fundamental to Twitter’s business and financial performance” and is “necessary to consummate the transactions contemplated by the Merger Agreement.”

The information on fake and spam accounts on the platform, Musk’s lawyers continued, “is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business.”

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

The SEC filing said Musk and his Morgan Stanley advisers have been requesting this information since May 9, but Twitter has “failed to provide much of the data and information” requested.

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

By Gary Bai

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