The letter added that although the Twitter board was under obligation to provide all the information that Elon Musk requested, “Twitter has not complied with its contractual obligations” after nearly two months of requesting the data.
“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 letter said. “Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
The letter added that the information was fundamental to the deal, and the failure of the board to provide the information after several requests could mean the end of the deal.
“This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it 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,” the letter added.
Recall that in May, Elon’s legal team had written to demand information regarding spam and fake accounts on the platform. The Friday letter added that: “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.”
Musk’s legal team added that the repeated demand by Musk could not compel the microblogging platform to provide the information.
“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,” the letter added. “While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors.”
The letter accused Twitter of a breach of the Merger Agreement between both parties by providing false information to Mr. Musk, adding that he now has the right to terminate the deal.
“Twitter is in breach of the Merger Agreement because the Merger Agreement appears to contain materially inaccurate representations,” and Twitter provided information that includes an “untrue statement of a material fact.”
The letter concluded that “Mr. Musk hereby exercises [the] right to terminate the Merger Agreement and abandon the transaction.”
Reacting to the letter, Bret Taylor, the chairman of the Twitter Board said the board is committed to closing the transaction and it will take legal actions to enforce that.
“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,” Bret Taylor said on Twitter.
The news did not come without consequences. On Friday, after the release of the letter, Twitter’s stock fell by almost 6%. Many shareholders could be having fears about the prospects of Twitter if the deal fail to go through.
Twitter is expected to present a case before the Delaware Court that Elon Musk already agreed to purchase the microblogging platform at $44 billion. If Twitter can convince the court, Elon Musk would have no option but to pay the previously agreed price.
If Elon Musk can prove that Twitter had breached the purchase agreement, he would either have to renegotiate the deal or pull out completely. Either way, the outcome of the court judgment has a role to play in the future of Twitter.