Tycoon Elon Musk and his advisers sent a letter to Twitter Inc. , formally informing the cancellation of the purchase initially agreed at US$44 billion.
What many feared happened. Elon Musk announced that he will withdraw from the purchase of Twitter Inc. , initially agreed at US $ 44,000 million . The billionaire businessman’s advisers sent a letter to the firm officially notifying that they are terminating the agreement.
The move comes after three months of speculation that began when Musk revealed he owned 9.2% of the company’s shares, and a day after sources told the Washington Post the deal was in “serious jeopardy.” for the issue of spam and bot accounts on the platform.
Elon Musk says he will terminate his agreement to buy Twitter Inc. because the company “is in material breach of multiple provisions of that agreement” and appears to have made “false and misleading representations” in entering into the deal, according to a regulatory filing released Friday .
In a letter delivered to Twitter, the Holding I and II working group, Elon Musk companies designated for the merger, point out that Twitter has breached certain contractual conditions. Specifically, they refer to section 6.4 of the merger agreement, which “requires Twitter to provide Mr. Musk and his advisers with all data and information requested by Mr. Musk “for any reasonable business purpose related to the consummation of the merger.” transaction”. According to the team, this has not happened.
The document points to the repeated occasions in which Twitter ignored Elon Musk’s requests for access to information, mentioning that in some cases these “requests were rejected for reasons that appear unjustified.”
This makes sense with the warnings the day before, in which Elon Musk’s working group determined that “Twitter cannot verify the number of bot and spam accounts”, so it would be violating part of the agreement signed by both parties. The message states that “This information is critical to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated in the Merger Agreement because it is necessary to ensure that Twitter meets the conditions for closing, to facilitate financing and Mr. Musk’s financial planning for the transaction, and to participate in transition planning for the business.”
Bred Taylor, president of Twitter, has come out to mention that they are “committed to closing the transaction with the price and terms agreed with Musk and plan to initiate legal action to enforce the merger agreement” He indicated that he had confidence in the decision made by the Delaware Court of Chancery.
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 (@btaylor) July 8, 2022
In the form filed with the Securities and Exchange Commission, the signatories state that “ Mr. Musk is also reviewing the company’s recent financial performance and revised outlook, and is considering whether the company’s declining business and financial prospects constitute a Material Adverse Effect on the Company giving Mr. Musk a separate and distinct basis to terminate the Merger Agreement.”
According to the terms of the purchase agreement stipulated in April, if negotiations do not come to fruition, the party that backs down would have to pay the sum of US$1,000 million under specific circumstances. However, Musk had warned that he would divest him of 9.2% of the company’s shares if the board did not agree to his terms. So far, Twitter and Musk have been silent on social media. However, it poses a hostile scenario in court for the coming months, since the deadline for the completion of the transition was until October 2022.