Twitter told Elon Musk in a letter that its “alleged termination” of its merger agreement “is invalid and unlawful” and that its commitment to finance the purchase remains in effect.
The letter, sent Sunday to Musk’s lawyers and made public Monday in a regulatory document, is a prelude to the lawsuit Twitter intends to file against Musk this week. The letter said:
The alleged termination of Mr. Musk and the other parties to Musk is invalid and unlawful, and constitutes a repudiation of its obligations under the Agreement. Contrary to the statements in your letter, Twitter has not breached any of its obligations under the Agreement, and Twitter has not suffered or is likely to suffer any material adverse effects from the Company. The alleged termination is not valid for the independent reason that Mr. Musk and the other parties to Musk have knowingly, intentionally, voluntarily and materially breached the Agreement, including, inter alia, Sections 6.3, 6.8 and 6.10 thereof.
The sections cited include various commitments to close and finance the agreement. The Twitter letter further stated that the Twitter / Musk agreement “is not over, the Bank Debt Commitment Letter and the Equity Commitment Letter remain in effect, and Twitter demands that Mr. Musk and the other parties to Musk fulfill their obligations under the agreement. ” In the capital commitment letter dated April 20, Musk pledged to provide capital financing of approximately $ 21 billion for the purchase of $ 44 billion.
The Twitter letter said Musk and his partners must make “the best reasonable efforts to consummate and enforce the transactions contemplated by the agreement, … the bank debt commitment letter and the capital commitment letter” .
The letter concluded:
As it has done, Twitter will continue to provide information reasonably requested by Mr. Musk under the Agreement and diligently taking all necessary steps to close the transaction. Twitter reserves all contractual, legal, and other rights, including its right to specifically enforce the obligations of Musk’s parties under the Agreement.
The Twitter letter was sent by attorney William Savitt of the law firm Wachtell, Lipton, Rosen & Katz that Twitter hired to handle his upcoming lawsuit against Musk. Announcements
Musk cited Twitter’s “declining business prospects.”
Musk sent a letter on Twitter on Friday saying it is terminating the merger deal. He claimed that Twitter violated the merger agreement by not providing all the data of the spam bots it wants. Musk also argued that Twitter’s claims about the accuracy of his spam account estimates likely cause “a material adverse effect on the company, which may provide an additional basis for terminating the merger agreement.”
“Mr Musk is also examining the company’s recent financial performance and revised outlook, and is considering whether the company’s business outlook and declining financial outlook constitute a material adverse effect on the company that gives Mr Musk a separate and different basis for terminating the Merger Agreement “. Musk’s letter said.
While the merger deal includes a $ 1 billion breakout fee, it also has a clause that offers 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 a specific return or other equitable remedy” for “causing the investor equity.” [Musk] to finance equity financing or to enforce the capital investor’s obligation to finance equity financing directly and to complete the closing “.
“We are confident that we will prevail in the Delaware Chancellery Court,” Twitter board chairman Bret Taylor wrote Friday.