Shares of Twitter fell about 7% after hours on Friday. In the letter, disclosed in a Securities and Exchange Commission filing, Skadden Arps attorney Mike Ringler charged that “Twitter did not comply with its contractual obligations.” Ringler alleged that Twitter did not provide Musk with relevant business information he requested, as Ringler said the contract would require. Musk previously said he wanted to evaluate Twitter’s claims that about 5% of its monetized daily active users (mDAUs) are spam accounts. “Twitter failed or refused to provide this information,” Ringler claimed. “Twitter has sometimes ignored Mr. Musk’s requests, sometimes denied them for what appear to be unjustified reasons, and sometimes claimed to comply by giving Mr. Musk incomplete or useless information.” Ringler also alleged in the letter that Twitter breached the merger agreement because it allegedly contains “materially inaccurate statements.” This category is based on Musk’s own preliminary review of spam accounts on the Twitter platform. Twitter said it is not possible to calculate spam accounts from solely public information and that a team of experts is checking to arrive at the 5% figure. “While this analysis remains ongoing, all indications suggest that several of Twitter’s public disclosures about its mDAUs are either false or materially misleading,” Ringer claimed. He also argued that Twitter breached its obligations under the agreement to obtain Musk’s consent before changing its normal course of business, pointing to recent layoffs at the company. While Musk is now officially seeking to exit the deal, this saga is very likely far from over. Under the terms of the deal, Musk agreed to pay $1 billion if he backed out. However, Twitter could seek to hold Musk to his original deal or get a bigger payout by suing over his departure if they question his reasoning for letting him out of the contract. Twitter has reason to seek to keep Musk on his original terms. The stock has fallen sharply since the board announced it had accepted its offer to buy the company at $54.20 per share. On the day of this announcement, the stock closed the trading day at $51.70 per share. Shares of Twitter were at $36.81 as of Friday’s close. Twitter did not immediately respond to a request for comment. This is breaking news. Check back for updates.
