Elon Musk has today announced he wants to end his $44 billion deal to buy Twitter, according to a letter seen by Techspace Africa sent by a lawyer on his behalf to the company’s chief legal officer Friday.
In the letter, Skadden Arps attorney Mike Ringler argues that Twitter did not comply with its contractual obligations by providing Musk with relevant business information as requested. Musk has previously said he wanted to assess Twitter’s claims that about 5pc of its monetizable daily active users (mDAUs) are spam accounts.
“Twitter has failed or refused to provide this information,” Ringler claimed. “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 further states that Twitter breached the merger agreement because it allegedly contains “materially inaccurate representations.” This accusation is based on Musk’s own preliminary review of spam accounts on Twitter’s platform. Twitter has said it’s not possible to calculate spam accounts from solely public information and that a team of experts conducts a review to reach the 5% figure.
“While this analysis remains ongoing, all indications suggest that several of Twitter’s public disclosures regarding its mDAUs are either false or materially misleading,” Ringer alleged.
Musk also accuses Twitter breached its obligations under the agreement to get his consent before changing its ordinary course of business, pointing to recent layoffs at the microblogging site.
Musk has expressed he wants to walk away from the deal, however, under the terms of the agreement, Musk will have to pay $1 billion if he actually backs out. Of course, Twitter could still hold Musk to his original deal or sue him to get a bigger payout for walking away if they dispute that his reasoning should let him out of the contract.