‘Material Breach’: Elon Musk threatens to abandon $44Billion Twitter deal

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After accusing Twitter of refusing to provide him information about its spam bot accounts, Elon Musk has threatened to walk away from his $44 billion (£35 billion) offer to purchase Twitter. Musk’s ultimatum comes after Twitter was accused of refusing to give him information about its spam bot accounts. According to a letter sent by Tesla’s legal team to Twitter on Monday (the 6th of June), the company’s CEO has threatened to sue the company.

According to the letter, Musk has been requesting the information since May 9, a month after making his bid to purchase the firm, in order to determine how many of the company’s 229 million accounts are false. According to the attorneys, Twitter has only offered to share information regarding the company’s procedures for establishing the number of accounts, which they claim is “tantamount to denying Mr. Musk’s data demands.”

Musk wants access to the underlying data so that he may independently verify Twitter’s allegedly shoddy practices. According to the attorneys, the Tesla CEO thinks Twitter is rejecting and blocking his information rights under the April merger deal, based on the company’s most recent letters. ‘This is a clear substantial violation of Twitter’s commitments under the merger agreement, and Mr. Musk retains all rights arising therefrom, including the right not to execute the deal and the right to cancel the merger agreement,’ according to the letter.

The Twitter selling agreement permits Musk to back out of the purchase if the firm has a material unfavorable impact.’ This is defined as a move that has a negative impact on Twitter’s business or financial situation. Musk said last month that he was putting the transaction on hold unilaterally, something experts argued he couldn’t do. He might be hit with a $1 billion breakup fee if he walks away.

According to Brian Quinn, a law professor at Boston College, he is ‘searching for a way out of the transaction or anything that would gain leverage for a renegotiate of the price.’ Prof Quinn, on the other hand, believes it is unlikely to stand up in court since he has already relinquished his right to request more due diligence.

Prof Quinn remarked, “I doubt he would be permitted to walk away.” ‘At some time, the Twitter board of directors will get tired of it and bring a lawsuit,’ according to the report, seeking a court to compel Musk to keep to the arrangement. According to Twitter CEO Parag Agrawal, the business has always assumed that less than 5% of Twitter accounts are false. For years, Twitter has told the US Securities and Exchange Commission about its bot estimates, while simultaneously warning that the figure may be too low.

‘If Twitter is confident in its publicized spam predictions, Mr. Musk does not understand the company’s unwillingness to enable Mr. Musk to independently review those numbers,’ Musk writes in the letter, adding that he agrees not to reveal or store the data. Musk, one of Twitter’s most active celebrity users, has long struggled with the bot issue since his name and picture are often imitated by phony accounts advertising cryptocurrency schemes.

Musk seems to believe that bots are an issue for most other Twitter users, as well as marketers who buy Twitter advertisements based on the number of genuine people they anticipate reaching.

The letter, written by his lawyer Mike Ringler and copied to other attorneys, refers to a dispute over a letter from Twitter dated June 1 in which the business said that its disclosure duties are restricted to aiding the sale’s conclusion. According to the agreement, Twitter is required to give data for any legitimate business purpose necessary to complete the transaction.

According to the letter, Twitter must also cooperate with Mr Musk’s efforts to secure funding for the purchase, including supplying material that is reasonably required’ by Musk. According to the letter, he is not compelled to justify his request for data or to agree to “additional constraints the corporation has sought to place on his contractual entitlement to the requested data.” It also claims that Musk is entitled to information regarding Twitter’s basic business model in order to plan the transition to his ownership.

Source: CarDealerMagazine

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