Elon Musk has finally pulled the plug on the world’s biggest tech buyout plan this year so far - the $44 billion deal to acquire Twitter. It’s unlikely that the world’s richest person did not know the outcome of the termination of his deal, which has set the legal stage with the social media giant announcing that it would take the world’s richest person to court.
In a filing, the Tesla chief has given a timeline of the failure of merger as he accused Twitter of breach of agreement. “Twitter has not provided information that Mr. Musk has requested for nearly two months notwithstanding his repeated, detailed clarifications intended to simplify Twitter’s identification, collection, and disclosure of the most relevant information sought in Mr. Musk’s original requests,” it reads.
Musk and his Morgan Stanley financial advisors, it has been claimed, had been seeking information on the prevalence of fake accounts since May 9. On May 25, according to the filing, Musk made it clear that “he wanted to understand how many of Twitter’s claimed mDAUs were, in fact, fake or spam accounts.” “mDAUS” here refers to “monetisable daily active usage or users”.
The microblogging site is in breach of contract because it refused to reveal the information, Musk has alleged. “Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction,” the filing further underlines.
{{/usCountry}}The microblogging site is in breach of contract because it refused to reveal the information, Musk has alleged. “Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction,” the filing further underlines.
{{/usCountry}}Adding that “while Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful”, Musk has further said that the social media giant has been on notice of its breach since June 6.
The Tesla chief had sought the following details after sealing the deal: information related to Twitter’s process for auditing the inclusion of spam and fake accounts in mDAU, information related to Twitter’s process for identifying and suspending spam and fake accounts, daily measures of mDAU for the past eight (8) quarters, board materials related to Twitter’s mDAU calculations, and materials related to Twitter’s financial condition.
Twitter spam accounts are believed to be much higher than 5 per cent, the figure claimed by the social media giant in the SEC (Securities and Exchange Commission) filing, Musk said, stressing that its process of calculating the spam accounts appears to be "arbitrary and ad hoc".
"Disclosing that Twitter has a reasoned process for calculating mDAU when the opposite is true would be false and misleading," the filing concludes.
Meanwhile, Twitter chairman Bret Taylor has said they would take Musk to court: "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," he tweeted, shortly after Musk's termination of deal.