Twitter told Elon Musk in a letter that his “purported termination” of their merger deal “is void and unlawful” and that its commitment to fund the purchase remains in effect.
The letter, sent to Musk’s lawyers on Sunday and published Monday in a regulatory filing, is a prelude to the lawsuit Twitter plans to file against Musk this week. The letter said:
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 material adverse effect to the company. The purported termination is void for the independent reason 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 quoted sections include various commitments to close and finance the transaction. Twitter’s letter also said, “The Twitter/Musk Agreement has not been terminated, the Bank Debt Commitment Letter and the Equity Commitment Letter remain in effect, and Twitter requires Mr. Musk and the other parties to Musk to comply with their obligations under the Agreement”. In the April 20 equity commitment letter, Musk committed to providing approximately $21 billion in equity financing for the $44 billion purchase.
The Twitter letter said Musk and his partners must use “maximum reasonable efforts to consummate and effectuate the transactions contemplated by the Agreement, … the Bank Debt Commitment Letter and the Equity Commitment Letter.”
The letter concludes:
As done, Twitter will continue to provide information reasonably requested by Mr. Musk under the Agreement and to diligently take all necessary steps to complete the transaction. Twitter reserves all contractual, statutory and other rights, including its right to specifically enforce the Musk parties’ obligations under the Agreement.
The letter to Twitter was sent by attorney William Savitt of the law firm Wachtell, Lipton, Rosen & Katz, which Twitter has hired to handle the pending lawsuit against Musk. Advertising
Musk cited a “deteriorating business outlook” on Twitter
Musk sent a letter to Twitter on Friday terminating the merger agreement. He claims Twitter breached the merger agreement by failing to provide all the spam bot data it requested. Musk also argued that Twitter’s claims about the accuracy of its spam account ratings would likely cause “a material adverse effect to the company that could form an additional basis for termination of the Merger Agreement.”
“Mr. Musk is also examining the company’s recent financial results and revised outlook and considering whether the company’s deteriorating business and financial prospects constitute a material adverse effect on the company giving Mr. Musk a separate and distinct basis for terminating the Agreement merger,” 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 says 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 impose the obligation of the equity investor to directly finance the equity financing and to effect the Closing.”
“We are confident we will prevail in the Delaware Court of Chancery,” Twitter Chairman Brett Taylor wrote Friday.
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