Microblogging site Twitter demanded on Monday, 11 July that Elon Musk complete his proposed $44 billion acquisition of the company, slamming the Tesla chief’s recent move to withdraw his offer as “invalid and wrong.”
In a letter to Musk’s attorneys included in a securities filing on Monday, Twitter’s lawyers said that “Twitter has breached none of its obligations under the Agreement,” AFP reported.
"Twitter demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement, including their obligations to use their respective reasonable best efforts to consummate and make effective the transactions contemplated by the Agreement," the letter said.
Musk terminated his $44 billion deal to buy Twitter, accusing the tech company of making "false and misleading representations" about the prevalence of fake accounts on its platform.
"Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr Musk relied when entering into the Merger Agreement," Musk's lawyers said in a regulatory filing.
Musk and his financial advisors have been requesting critical information from Twitter as far back as 9 May and repeatedly since then, the filing stated.
Responding to the withdrawal, Twitter's Chairperson Bret Taylor said that the company's board will pursue legal action to enforce the merger agreement and that they were confident of prevailing.
Despite his recent decision, Musk is in a legally binding agreement and Twitter's board has indicated that it will hold him to it.
Twitter's Options
Twitter could technically allow Musk to abandon the deal after paying $1 billion as a termination fee – a provision that might come into play if the board doesn't want to go through the hassle of suing Elon Musk.
Musk could also walk away from the deal if Twitter is found to have seriously misreported some figures in its filings which have a material adverse effect (MAE) on the company.
However, courts rarely accept the MAE argument and if the matter does go to court, Twitter could secure an order obligating Musk to complete the acquisition.
This is because the merger agreement includes a specific performance provision that allows Twitter to force Musk to consummate the deal, according to Bloomberg.
Musk had said that his acquisition of Twitter "cannot move forward" until the social media platform shows proof that spam and fake accounts constitute less than five percent of its daily average users. He said that his team would test "a random sample of 100 followers" of an official Twitter account to figure out if its estimate was accurate. He also invited others to "repeat the same process and see what they discover."
In another tweet, Musk revealed that he picked 100 as the sample size because "that is what Twitter uses to calculate" fake accounts.
While Twitter hasn't confirmed if this is true, Musk said that the company's legal team accused him of violating a non-disclosure agreement (NDA) by revealing the sample size.
(With inputs from AFP and Bloomberg.)
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