In an unexpected turn of events, Tesla CEO Elon Musk announced his intention to end the $44 billion Twitter deal via a letter sent to the board of the social media giant.
In short, the world’s richest man is not happy with the lack of information Twitter provided about spam and fake accounts. According to the letter, which is addressed to Twitter’s chief legal officer Vijaya Gadde, Musk is terminating the merger because Twitter “appears to have made false and misleading representations” which Musk used as a reference point for his decision.
Elon Musk initially agreed to purchase the crypto-friendly social media platform for $54.20 per share, or about $44 billion, in cash. The board of Twitter was happy with the decision, unanimously voting in favor of the deal that would make it a privately held company once again.
However, the letter filed for the SEC argued that Twitter was not very clear about two crucial data — Twitter’s process for auditing the inclusion of spam and fake accounts in monetizable daily active users (mDAU) as well as identifying and suspending such accounts. The social media giant was reportedly secretive about the daily measures of mDAU for the last two years. The letter reads:
“In short, 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.”
The letter then claims that Twitter is breaching two sections of the merger agreement (Sections 6.4 and 6.11). The letter says the social media company has been on notice of its breach since June 6, and “any cure period afforded to Twitter under the Merger Agreement has now lapsed.”
However, the Twitter board is definitely not happy with Elon Musk terminating the agreement and abandoning the transaction. In a tweet, Twitter chairman Bret Taylor said that the board is looking to close the transaction on the previously agreed price and will pursue legal action if necessary. “We are confident we will prevail in the Delaware Court of Chancery,” Taylor wrote.
In April 2022, Musk revealed his intent to remove all spam and scam bots accounts from Twitter if his $44 billion offer was accepted. His master plan to improve the social media platform also included introducing new features like the ability to edit Tweets and view edit history.
Over the past several years, Twitter account hacks and bots have contributed to numerous scam and phishing attempts. As of the latest, Yuga Labs co-founder, pseudonymously known as Gordon Goner, issued a warning about an orchestrated attack on its social media accounts while alleging the involvement of a Twitter insider.
Previously, Changpeng “CZ” Zhao’s crypto exchange Binance had committed $500 million to co-invest in Twitter along with the world’s richest man.