What you need to know
- Elon Musk has filed with the SEC to terminate his agreement to buy Twitter.
- Musk claims that the information provided by Twitter on several fronts has been inadequate.
- Twitter's Chairman, Bret Taylor, has said the deal will go through.
It's been a wild few months for Twitter, and just today, an SEC filing has signaled Elon Musk's wishes to terminate his agreement to buy Twitter for over 40 billion dollars.
The SEC filing details a few grievances that Elon Musk and his buying partners have with the information Twitter as providing them.
The biggest concern seems to be the prevalence of Spam/Bot accounts, something Elon Musk has been very vocal about since making his intentions to buy Twitter known.
"Mr. Musk and his financial advisors at Morgan Stanley have been requesting critical information from Twitter as far back as May 9, 2022—and repeatedly since then—on the relationship between Twitter's disclosed mDAU figures and the prevalence of false or spam accounts on the platform."
The filing says that Musk has repeatedly asked for information on these accounts, and Twitter seemingly hasn't provided satisfactory answers.
"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."
Data concerning spam and bot accounts isn't the only information Musk has been seeking; the SEC filing also mentions for the past two months, Musk has been seeking "materials related to Twitter's financial condition."
" Mr. Musk is entitled, under Section 6.4 of the Merger Agreement, to "all information concerning the business … of the Company … for any reasonable business purpose related to the consummation of the transactions" and under Section 6.11 of the Merger Agreement, to information "reasonably requested" in connection with his efforts to secure the debt financing necessary to consummate the transaction. To that end, Mr. Musk requested on June 17 a variety of board materials, including a working, bottoms-up financial model for 2022, a budget for 2022, an updated draft plan or budget, and a working copy of Goldman Sachs' valuation model underlying its fairness opinion. Twitter has provided only a pdf copy of Goldman Sachs' final Board presentation."
This is another dramatic twist in the Twitter saga, as just earlier today, it was reported that Musk could take drastic measures. Now, just because there's been a filing doesn't mean the deal is entirely kaput. However, it certainly looks unlikely that Elon will be buying Twitter after this revelation.
In a shocking twist, Twitter's Chairman, Bret Taylor, took to the social media platform to say the deal would happen and has stated they will take legal action.
The Tweet reads:
"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."
We will have to see how everything shakes out. We will have more on this story as it develops.
