Elon Musk terminates his $44 billion Twitter contract due to "misleading claims"

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• Jul 9, 2022 | Dhupali Das

Musk said in the letter that he thought the percentage of spam bots was significantly more than 5%...

Digital Desk: Elon Musk announced he is cancelling his $44 billion deal to buy Twitter Inc. and take it private, claiming the firm made "misleading claims" about the number of spam bots on the service.

"Twitter had not "complied with its contractual responsibilities" to provide information about how to gauge the prevalence of the bots on the social media platform," Musk wrote in a letter to Twitter that was sent as a part of regulatory filing on Friday,

For several months, Musk has been dissatisfied with Twitter for understating the number of bots that are a part of its user base. The firm has refuted that assertion, claiming that less than 5% of users are bots; officials reiterated their estimations on Thursday during a press briefing.

The letter describes the numerous occasions Musk and his team have sought Twitter for more details about bots but have not been given enough to answer their inquiries. The material is "minimally valuable" since it "has come with strings attached, use limitations, or other artificial formatting elements." Musk said in the letter that he thought the percentage of spam bots was significantly more than 5%, without providing any supporting data.

Musk further asserted that Twitter had not conducted its regular business as usual. The San Francisco-based business implemented a hiring freeze, let go of key executives, and had other significant departures. Musk claimed in the letter that it was a "material breach" of the merger agreement that "the Company has not received Parent's authorization for changes in the conduct of its Business, including for the Specific Changes Listed Above."

A clause in Musk's agreement with Twitter stated that, under certain conditions, the party breaching the contract would be required to pay a termination fee of $1 billion. Legal experts have argued over whether the dispute over spam bots is sufficient for Musk to withdraw from the agreement.

However, Musk may be unable to walk away by paying the termination fee simply. According to the initial filing, the merger agreement contains a particular performance clause that enables Twitter to compel Musk to complete the transaction. This may imply that should the transaction end up in court; Twitter may obtain a compelling injunction for Musk to finish the merger rather than financial compensation for any violations instead.

On June 6, Twitter reiterated its commitment to hold Musk to the conditions of his proposed acquisition, indicating that the firm believed he might be attempting to sabotage the deal. The company repeated its threat to enforce the merger on Thursday if Musk decided to challenge it.