The letter, sent to Musk’s lawyers on Sunday and made public on Monday in a regulatory filing, is a prelude to the lawsuit Twitter plans to file against Musk this week. The letter read: The purported termination of Mr. Musk and the other Musk Parties is void and illegal and constitutes a waiver of their obligations under the Agreement. Contrary to the allegations in your letter, Twitter has not breached any of its obligations under the Agreement and Twitter has not suffered and is not likely to suffer a Company Material Adverse Effect. The purported termination is void on the independent ground that Mr. Musk and the other Musk Parties knowingly, willfully, willfully and materially breached the Agreement, including, but not limited to, Sections 6.3, 6.8 and 6.10 thereof. The referenced sections include various commitments to closing and financing the deal. Twitter’s letter further stated that the Twitter/Musk “Agreement is not terminated, the Bank Debt Commitment Letter and Equity Commitment Letter remain in effect, and Twitter requires Mr. Musk and the other Musk Parties to comply with them under the Agreement”. In the April 20 equity commitment letter, Musk pledged to provide about $21 billion in equity financing for the $44 billion purchase. The Twitter letter said Musk and his partners must use “reasonable best efforts to consummate and effectuate the transactions contemplated by the Agreement, …the Bank Debt Commitment Letter and the Equity Commitment Letter.” The letter concluded: As it did, Twitter will continue to provide information reasonably requested by Mr. Musk under the Agreement and to diligently take all steps necessary to close the transaction. Twitter reserves all contractual, statutory and other rights, including its right to specifically enforce the obligations of the Moscho Parties under the Agreement. Twitter’s letter was sent by attorney William Savitt of the Wachtell, Lipton, Rosen & Katz law firm that Twitter hired to handle its upcoming lawsuit against Musk. Advertising
Musk cited Twitter’s “diminishing business prospects.”
Musk sent a letter on Twitter on Friday saying he was terminating the merger agreement. He argued that Twitter breached the merger agreement by not providing all the spam bot data it wants. Musk also argued that Twitter’s claims about the accuracy of its spam account estimates are likely to cause a “Company Material Adverse Effect, which may provide an additional basis for termination of the Merger Agreement.” “Mr. Musk also reviews the company’s recent financial performance and revised outlook and considers whether the company’s declining business and financial prospects constitute a material adverse effect on the company that gives Mr. Musk a separate and distinct basis for termination of the Merger Agreement.” Musk’s letter said. While the merger agreement includes a $1 billion breakup fee, it also has a clause that gives Twitter a way to force Musk to close the deal. The agreement states that if Twitter fulfills its obligations under the agreement, it “will be entitled to specific performance or other equitable relief” to “cause the Equity Investor [Musk] to fund the Equity Financing or to obligate the Equity Investor to directly fund the Equity Financing and complete the Closing.” “We are confident that we will prevail in the Delaware District Court,” Twitter chairman Brett Taylor wrote Friday.
