Elon Musk is trying to renegotiate a deal to buy Twitter for $44 Billion
According to a Friday filing to the Securities and Exchange Commission (SEC), Elon Musk wants to renegotiate his $44 billion deal to acquire Twitter.
Musk’s lawyers claim that Twitter made false and misleading statements during negotiations regarding the number of monetizable daily users (mDAUs).
Musk’s lawyer stated this in a letter to Vijaya Gadde (Twitter’s Chief Legal Officer).
“Twitter is breaking the Merger Agreement because the Merger Agreement appears to contain materially inaccurate representations…
Twitter repeatedly stated in such filings that the percentage of its mDAUs is false or spam. This included statements like: “We have done an internal review on a sample account and estimated that the average false or spam account during the first quarter 2022 represented less than 5% of our total mDAU during that quarter …’.”
This representation was used by Musk (and Twitter’s many public statements about spam accounts in publicly filed SEC documents) when he agreed to the Merger Agreement.
If these material representations are found to be false, Mr. Musk can seek rescission.
Musk’s lawyers also claim that Twitter is lying about how many bots it has members.
It may not surprise that Musk’s lawyers have cited it as why they pulled out of the agreement after public criticism of Twitter’s bot problem.
The sharp fall in stock price is another reason. Musk might be second-guessing. Musk valued Twitter at $54.20 per share when he offered to buy it. The worth of the shares has fallen to $36.81 since then.
Musk will not be able to sell Twitter, regardless of whether it is because of bots or the bottom line.
What’s the Deal?
Twitter has stated that it is determined to close the deal and will take legal action to enforce it.
Bret Taylor, chairman of Twitter’s board of directors, replied to Musk’s email.
Musk will have to prove that Twitter has violated the agreement if the Twitter board decides to take legal action.
Twitter lied about how many bots it had
Musk could be resigning for this reason.
These are questions that a judge must decide upon after reviewing both sides’ cases.
We know that this story is far from finished. If it goes to court, expect it to drag on for several more months.