Musk regretted his decision to buy the micro-messaging service. He is attempting to get out of the agreement.
In a letter to the US Securities and Exchange Commission (SEC), Musk's lawyers said that he was walking away from the deal because of false and misleading statements made about its user data.
When he agreed to buy the company, Musk expressed concern about the percentage of users that are non-human.
This is a concern that Musk should have been aware of. He is going to have a hard time in court as he is going to be sued to complete the deal.
Musk claims that he was deceived by false and misleading representations about user data on the platform.
The takeover agreement didn't mention anything about the internet. Musk's lawyers introduced a new strategy. The bot issue alone probably wouldn't get Musk out of the deal, so Musk's lawyers claimed thatTwitter didn't give him enough information to complete his debt financing agreements. According to The Washington Post, he was given access to the "firehose", a stream of tweets and data about them.
The new letter didn't mention his debt financing at all. It claims that Musk requested financial materials on June 17 but does not show how he can't get the loans he needs to complete the takeover. The data that was given to Musk was not usable.
The discrepancy about bots is the focus of today's letter. Musk believes that the proportion of false and fake accounts included in the reported mDAU count is much higher than 5%. In the past, the company has claimed that the percentage of its mDAU that are non-human is less than 5% but that it could be more.
There is a legal standard that would require a demonstration of a long-term, significant impact on the company's earnings power if he is to walk away.
In the letter, Musk said that the company needed to get Musk's consent before laying off staff and instituting a hiring freeze, as well as before some executives resigned. It is not clear how Musk could have given the go-ahead for his own employees to leave.
Lipton said that he would be surprised if some minor personnel changes were made in response to an economic downturn.
According to the contract, Musk can be sued for "specific performance" if he doesn't complete the deal.
The board chair of the company said that they will go to court to enforce the agreement. Taylor wrote that the board plans to pursue legal action to enforce the merger agreement. The Delaware Court of Chancery is where we are confident we'll win.
It was no surprise that Musk would try to end the deal. It's not clear whether this about-face is due to the market downturn or a genuine change of heart.
It's clear that Musk will become the owner of a website he doesn't want to own, because he seems very confident that he'll win in court.
"These don't seem to be very strong claims, but that doesn't mean he won't try to drag out a fight."
All Rights Reserved © 2024
