Up until a few months ago, Twitter had a problem on its hand, an Elon sized problem. The man had joked about buying twitter before, but this time there was an actual offer on the table. The problem for Twitter was, the offer was too good to refuse. Twitter being a publicly traded company was obligated to act in the best interest of the shareholders, and that included accepting an offer that valued the company fairly, which happened to be $43.4bn or $54.20 per share, a massive 54% premium on its share price at that time.
20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.
My offer was based on Twitter’s SEC filings being accurate.
Yesterday, Twitter’s CEO publicly refused to show proof of <5%.
This deal cannot move forward until he does.
— Elon Musk (@elonmusk) May 17, 2022
Sadly for people waiting for Musk’s Twitter utopia, the deal never closed. The company accepted Musk’s offer, but both parties went back and forth often publicly on key issues. One of the biggest contentions for Musk was Twitter’s total bot/spam accounts count, which the company stated was under the five percent mark of total active users on the platform.
Twitter’s CEO, Parag Agrawal in a detailed thread explained how Twitter handled bots and spam accounts, and even shed light on how it was actually very difficult to get an accurate estimate of spam activity on a social platform such as Twitter.
Let’s talk about spam. And let’s do so with the benefit of data, facts, and context…
— Parag Agrawal (@paraga) May 16, 2022
Elon Musk however wasn’t convinced and maintained that the actual count of spam and bot accounts was much higher, as much as 20 percent which is 4 times higher than the stated number on Twitter’s SEC filings. Eventually Musk put the deal on hold, and later terminated the deal, with his lawyers stating “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,”
Twitter isn’t giving up
Alas, the story doesn’t end here as the Twitter deal also had a $1 billion termination clause, which Twitter seems to be keen on receiving. To that end, the company filed a lawsuit with the Chancery Court of Delaware last week, alleging egregious conduct. Elon Musk’s lawyers however wanted to delay the proceedings till next year. Sadly for Musk, Kathaleen McCormick, Chancellor of the Delaware Court of Chancery recently ruled in Twitter’s favour, requesting for an expedited trail. The five day trail is going to take place in October this year.
Twitter knows it has a strong legal precedence to win the suit, as Musk is contractually obligated to make his best efforts to close the deal. It all depends on how Musk is able to conclusively prove that Twitter’s bot/spam account numbers are significantly over the stated 5 percent mark and how that detrimentally impacts his acquisition and plans for the company.
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