Space X and Tesla CEO Elon Musk has reportedly terminated his deal to buy Twitter. The billionaire reportedly sent a letter to terminate the deal on Friday.
The deal has been on hold since May, after Musk demanded that the social media giant prove that bots are less than five percent of users.
In the SEC letter from Musk’s team, it alleges that Twitter has not "complied with its contractual obligations."
The letter states that Musk has sought data and information necessary to "make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform" for nearly two months.
"This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business," the letter reads.
"Twitter has failed or refused to provide this information," it continues. "Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information."
The letter states that Musk has initiated numerous follow-up requests over the last two months regarding how many of the platform’s monetizable daily active users (mDAU) are fake or spam accounts.
"For the past month, Mr. Musk has been clear that he views Twitter’s non-responsiveness as a material breach of the Merger Agreement giving him the right to terminate the Merger Agreement if uncured," the letter reads. "Thus, Mr. Musk has been clear about his requests, his right to seek such information, and his view regarding Twitter’s material breach of the Merger Agreement."
The letter states that while Twitter has provided some of the requested information, "that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors."
"Based on the foregoing refusal to provide information that Mr. Musk has been requesting since May 9, 2022, Twitter is in breach of Sections 6.4 and 6.11 of the Merger Agreement."
In addition to concerns over the lack of data being released to Musk, the letter also states concerns over recent hiring and employment trends at Twitter, including the firing of its Revenue Product Lead and the General Manager of Consumer, a general hiring freeze, and three executives leaving their posts.
Musk's offer to buy Twitter was "based on Twitter's SEC filings being accurate," which claimed that fewer than five percent of the accounts on the site were bots.
Musk said that he believes 20 percent of accounts on the site are bots, according to Forbes, he tweeted that the 20 percent figure could me "much higher."
Musk tweeted on May 17 that the deal "cannot move forward" until this was proven, saying that he only offered to buy the platform based on Twitter's SEC filings "being accurate."
Musk said that CEO Parag Agrawal "publicly refused to show proof" after he tweeted that Twitter's "actual internal estimates for the last four quarters were all well under 5% – based on the methodology outlined above. The error margins on our estimates give us confidence in our public statements each quarter."
This is a breaking story and will be updated.
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