Elon Musk has called off the $44 billion deal to buy Twitter. He has blamed Twitter for the deal not going through.
Tesla CEO Elon Musk, in the letter terminating the Twitter deal, indicated various reasons why he was no longer interested in buying the company. Musk had made an unsolicited offer to buy Twitter for $44 billion in April. However, since then he has been back-pedalling on the deal that has culminated in his sending a letter that says he is no longer willing to buy Twitter. Many analysts had indicated early on that Musk had quoted too big an amount for Twitter and that he was regretting the offer thereafter. Here are the top 6 points made in the letter:
1. Twitter is “in material breach of multiple provisions” that were mentioned in a previous agreement with the company. In effect, the letter is saying that Twitter has not complied with its previously stated contractual obligations.
2. Twitter “appears to have made false and misleading representations upon which Mr Musk relied when entering into the Merger Agreement.”
3. Twitter did not provide proper information about its spam and bot accounts. This was requested by Musk in a letter dating May 25. “The May 25 Letter made clear that Mr Musk’s goal was to understand how many of Twitter’s claimed mDAUs were, in fact, fake or spam accounts.” Not just May 25, Musk had sent letter on June 6, 2022, June 17, 2022, and June 29, 2022 too.
4. “Mr Musk has reason to believe that the true number of false or spam accounts on Twitter’s platform is substantially higher than the amount of less than 5% represented by Twitter in its SEC filings.”
5. “For the past month, Mr Musk has been clear that he views Twitter’s non-responsiveness as a material breach of the Merger Agreement giving him the right to terminate the Merger Agreement if uncured.”
6. Apart from information on fake accounts, Musk letter also accused Twitter of not providing additional information relating to the company’s financial situation.