Source: The Washington Post / Getty
It’s becoming more apparent that billionaire Elon Musk is preparing to drop his attempt to buy Twitter after he sent a letter asserting that he has the right not to purchase the platform.
On Monday (June 6th), the legal firm representing the Tesla and SpaceX founder and CEO sent a letter to Vijaya Gadde, the general counsel of Twitter. “Based on Twitter’s behavior to date, and the company’s latest correspondence, in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” the letter says. “This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.” The letter was made public when Twitter sent it to the Securities and Exchanges Commission.
Musk has been insistent that the social media company provide concrete proof that its user base is fully authentic in the past couple of weeks, citing his belief that 20% percent of users on Twitter are bots. He has publicly rebuked Twitter’s statements that bots make up just under 5% of its reported users. He even went so far as to respond to a thread on the matter by Twitter’s CEO, Parag Agwaral with a poop emoji last month. Observers note that these moves are being made to potentially place Twitter in a position of causing a “material adverse effect”, which would put the company in breach of the contract and frees him up from buying. If Musk decides to not go forward with the $44 billion dollar deal, he faces a fine of $1 billion as specified in the documents detailing the arrangement. The deal could also be terminated if no agreement is reached by October 24th. Currently, the share price for Twitter on the stock market has fallen by 20% since Musk announced his intent to buy the social media platform in April.
Twitter responded to the letter later on with a statement: “Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
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