Elon Musk terminated his deal to buy Twitter claiming in his filing that they made false and misleading representations about the number of bots and spammers on the platform. If true, they also lied to the SEC. That can get them in serious, perhaps fatal trouble.
Elon Musk shared his belief about false representations in his letter to Twitter:
Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement).
“Twitter has repeatedly made statements in such filings regarding the portion of its mDAUs that are false or spam,” Musk believes.
If true and Twitter is aware of this, it’s fraud. However, Twitter appears ready and able to defend all of its filings. “Appears” is the operative word here. They better be since misrepresentations can get them in a lot of trouble.
Twitter plans to sue Mr. Musk.
It seems that Mr. Musk’s claims are unlikely to stick as Elon waived all rights to rework the deal when he signed the purchase agreement on April 25, and now it will be up to a judge to impose the original deal, which will take several years of lawsuits, or he can renegotiate the purchase price lower.
We will see what happens during the discovery phase.
The Twitter stock started to sink on Friday.
Expect a lot of fallout from this and some or much of it will fall on Elon Musk. So far, his Tesla stock and brand have suffered and his left-wing allies are disappearing. They continually attack him and his personal life.
Donald Trump appears to have predicted this outcome.
In May, Trump posted on his TRUTH Social platform:
There is no way Elon Musk is going to buy Twitter at such a ridiculous price, especially since realizing it is a company largely based on BOTS or Spam Accounts. Fake anyone? By the time you get rid of them, if that can even be done, what do you have? Not much? If it weren’t for the ridiculous Billion Dollar breakup fee, Elon would have already been long gone. Just my opinion, but Truth Social is MUCH better than Twitter and is absolutely exploding, incredible engagement!
Read the Filing
tm2220599d1_ex99-p on Scribd
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