Twitter and Musk set for legal clash over acquisition
After threatening to do so for months, Elon Musk has decided to pull out of his proposed acquisition of social media platform Twitter because he it hasn’t been transparent enough for his liking.
Musk sent a letter to Twitter’s Chief Legal Officer late last week, notifying her of his decision to terminate the merger agreement. The letter describes at some length Musk’s claimed attempts to get hold of sufficient information from Twitter to independently assess what proportion of its monetizable daily active users are bot or spam accounts. Twitter says that number is below 5% of the total but Musk doesn’t believe it.
A month ago Twitter appeared to make a significant concession by giving Musk and his team access to a ‘firehose’ of platform data. There was no immediate public response from Musk but it always seemed likely this would be insufficient for his deep auditing purposes. Musk’s letter details numerous subsequent communications between him and Twitter, apparently requesting more information, which he claims went unaddressed.
Twitter subsequently reiterated its determination to force Musk to go through with the deal, a somewhat ironic position given its initial opposition to the move. Presumably what Twitter really wants is to ensure Musk has to hand over the $1 billion that the acquisition agreement apparently commits him to pay in compensation if he pulls out. Musk will insist Twitter has breached the terms of that agreement, thus rendering it null and void.
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.
— Bret Taylor (@btaylor) July 8, 2022
As ever with Musk, it’s very difficult to know what he’s playing at. Why did he make the bid in the first place, if he was so worried about bot accounts? Is this all just a ploy to lower the price, given the broader stock market plunge since he made his bid? Or is it, as he would apparently have us believe, a piece of cleverness designed to force Twitter to reveal the information it seems so keen to conceal?
— Elon Musk (@elonmusk) July 11, 2022
Outside of the corporate soap-opera, this development will be disappointing for those who took Musk’s aspirations to restore freedom of speech to Twitter at face value. Those who didn’t like the thought of all this unfettered public communication, which sadly included many journalists, now seem strangely keen to ensure Musk can’t back out. This reveals their visceral dislike of Musk trumps any interest they have in Twitter one way or the other.
Once more opinion is divided over how this phase of the drama will play out. Twitter’s amateur lawyers seem to reckon the acquisition agreement doesn’t support Musk’s claimed breaches but that will now be down to the professionals to determine. Of course Twitter could just give Musk the information he wants but maybe there are good reasons why it can’t. Twitter co-founder Ev Williams seems to think it would be best just to draw a line under the whole affair and move on.
I’m sure there are legal/fiduciary reasons you have to say that, Bret. But if I was still on the board, I’d be asking if we can just let this whole ugly episode blow over. Hopefully that’s the plan and this is ceremony.
— Ev (@ev) July 9, 2022
Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.
