SEC Asks Elon Musk to Clarify Tweet About Quitting Twitter Acquisition
2022.07.15 22:31
- The Securities and Exchange Commission has asked billionaire Elon Musk for more information about his tweet related to the $44 billion acquisition of Twitter (NYSE:TWTR) that the billionnaire is trying to pull out of.
- Musk alleges that Twitter breached its end of the contract by not disclosing information related to spam accounts.
- Twitter, for its part, has sued Musk this week in order to force him to honor the agreement.
The United States Securities and Exchange Commission (SEC) has asked Elon Musk to provide more information about a tweet published by the billionaire on May 17th in relation to his $44 billion commitment to acquire Twitter, which he has since attempted to cancel.
This is not the first time that Musk has been scrutinized by the federal agency. In a letter dated June 7th and disclosed by the SEC on its website, the regulator offered details about the agreement commitment assumed by the CEO of Tesla (NASDAQ:TSLA).
In the regulatory filing, Musk’s attorney and Skadden firm partner, Mike Ringler, answered questions from the SEC’s Office of Mergers and Acquisitions in regards to the Tesla CEO’s tweet about the controversial acquisition.
The SEC asked Musk to clarify what he meant when he stated on his Twitter account that the acquisition of the social network “cannot move forward” until the company provides more information related to the spam accounts he requested.
“The term “cannot” suggests that Mr. Musk and his affiliates are exercising a legal right under the terms of the merger agreement to suspend completion of the acquisition of Twitter or otherwise do not intend to complete the acquisition,” they asked. SEC officials.
“Yet, we note that the Schedule 13D has not been amended to reflect the apparent material change that has occurred to the facts previously reported under Item 4 of Schedule 13D,” the filing adds.
The Response of Musk’s Lawyer at the Time
In addressing the query, Ringler wrote that his client did not think the tweet “triggered any required amendment to his previously filed Schedule 13D.”
“Despite Mr. Musk’s desire to obtain information to evaluate the potential spam and fake accounts, there was no material change to Mr. Musk’s plans and proposals regarding the proposed transaction at such time,” he added.
Musk’s attempts to break down the deal have been a repeated occurrence ever since. In various posts on the micro-blogging platform, the billionaire accused Twitter of breaching their end of the contract. Musk alleges that the company refused to disclose requested information, and made staff layoffs without his approval.
Twitter’s Counterattack
Twitter has denied all allegations, and claims that Musk is only seeking to back out of the deal due to changes in market conditions.
The company filed a lawsuit against Musk in Delaware Chancery Court on Tuesday, July 12th, in an attempt to force him to follow through on the $44 billion takeover deal.
Twitter’s lawyers described Musk’s attempt to withdraw from the acquisition as “invalid and wrongful” in another letter sent to the Securities Market Commission (SEC), and to Musk himself.
“Mr. Musk’s alleged termination of his contract is invalid and wrongful, and constitutes a repudiation of his obligations under the agreement,” wrote William Savitt, a partner at law firm Wachtell, Lipton, Rosen & Katz, which represents Twitter.
“Contrary to the assertions in his letter [which Musk sent to the company on friday], Twitter has breached none of its obligations under the Agreement,” Savitt added.
According to the company’s lawyers, Musk is bound by the agreement because he and his legal team ” knowingly, intentionally, willfully, and materially breached the Agreement”.
On the Flipside
- Legal experts say the outcome of the court dispute between Musk and Twitter is uncertain.
One potential outcome is that the court forces the eccentric businessman to honor the deal, or pay a $1 billion breakage penalty.
The other is that time and judgment play to Musk’s advantage, and he manages to renegotiate a deal with the company below the original price.
It also cannot be ruled out that the tycoon escapes without paying anything at all, and that instead Twitter will have to reveal all of its secrets to the court, as Musk himself has alleged.
Find out more in:
Is Twitter Really Going to Sue Elon Musk for Ending the Deal?
