Update: Twitter Is a Lost Cause… a Waste of Time. Bots Are Rampant. Abandon that Wasteland of Phony Accounts. Deranged Liberals Use Twitter to Manipulate Society.

HNewsWire: For Christian/Conservatives, twitter is a lost cause, a total waste of TIME. Elon Musk quits Twitter deal; board to file lawsuit

Twitter's Board of Directors said on Friday that they seek to conclude the deal with Musk at $54.20 per share and will take legal action to enforce the agreement. Following the news, Twitter chairman of the board Bret Taylor stated that the board is "confident it will succeed in Delaware Court of Cancery."

Musk's filing isn't the end of the story, but it does signal the end of high-stakes speculation about whether he would complete the transaction after a public battle with the firm about the amount of bots on the platform.

According to the Wall Street Journal, the firm recently said that it has been exchanging information with Musk in order to complete the acquisition as outlined in the merger agreement, and they repeated their desire to finalize the transaction and enforce the agreement.

Mr. Musk's ability to walk away from the arrangement is not certain, as Twitter is anticipated to fight his legal grounds. Deal conflicts often result in negotiated settlements, which may involve a price reduction or one-time compensation.

Mr. Musk's lawyer mentioned worries about Twitter's estimations of how many of its daily users are fraudulent or spam accounts as an issue Mr. Musk raised nearly three weeks after signing the arrangement.

Exploration should be enjoyable...

Many people were wondering how the Musk-Twitter takeover scenario would finish, or who would be the first to sue.

Late Friday, Elon Musk decided to settle the debate by effectively breaching his contract signed three months ago, thereby ensuring a Delaware lawsuit, by announcing in a 13D filing that he is terminating his Twitter merger agreement, claiming that "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 be in material breach of the Merger Agreement."

Of course, none of that will matter because Elon waived all rights to renegotiate the deal when he signed the purchase agreement on April 25, and now it will be up to either I a judge to impose the original deal, which will most likely occur after several years of litigation, or ii) to renegotiate the purchase price lower.

The letter was issued to Twitter's general counsel, Vijaya Gadde, by Musk's legal firm, Skadden Arps.

Inc. Twitter

Suite 900, 1355 Market Street

94103 San Francisco, CA

Chief Legal Officer, Vijaya Gadde

Madame Gadde,

We refer to I the Agreement and Plan of Merger dated April 25, 2022 by and among X Holdings I, Inc., X Holdings II, Inc., and Twitter, Inc. (the "Merger Agreement") and (ii) our communication to you dated June 6, 2022 (the "June 6 Letter"). Mr. Musk is terminating the Merger Agreement, as further described below, because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations on 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).

While Section 6.4 of the Merger Agreement requires Twitter to give any data and information requested by Mr. Musk and his advisers "for any legitimate business purpose relating to the closing of the deal," Twitter has not met its contractual responsibilities. Mr. Musk has been looking for data and information for about two months in order to "conduct an independent evaluation of the incidence of phony or spam accounts on Twitter's platform" (our letter to you dated May 25, 2022 (the "May 25 Letter")). This information is critical to Twitter's business and financial performance, and it is required to complete the transactions contemplated by the Merger Agreement in order to ensure Twitter's satisfaction of the closing conditions, to facilitate Mr. Musk's financing and financial planning for the transaction, and to engage in business transition planning. Twitter has either failed to give this information or has refused to do so. Twitter has sometimes disregarded Mr. Musk's demands, sometimes rejected them for reasons that seem to be unwarranted, and occasionally pretended to cooperate while providing Mr. Musk with inadequate or useless information.

Mr. Musk and his Morgan Stanley financial advisers have been asking vital information from Twitter on the link between Twitter's published mDAU metrics and the incidence of fake or spam accounts on the network since May 9, 2022—and regularly since then. If there was any ambiguity about the nature of these information demands, Mr. Musk's purpose was made apparent in the May 25 Letter: he wanted to know how many of Twitter's reported mDAUs were, in fact, false or spam accounts. "Items 1.03 to 1.13 of the diligence request list comprise high-priority requests for enterprise data and other material designed to allow Mr. Musk and his advisers to undertake an impartial evaluation of the frequency of false or spam accounts on Twitter's platform," according to the letter. The letter then gave Twitter with a thorough list of such requests.

Mr. Musk has made multiple follow-up requests since then, all targeted at filling gaps in the limited information supplied by Twitter in response to his wide demands for information pertaining to Twitter's claimed mDAU numbers and reported estimates of fraudulent and spam accounts.

1 For example, in our communication to you dated June 29, 2022 (the "June 29 Letter"), we referred to Mr. Musk's May 25 Letter request for "information that would enable him to undertake an impartial evaluation of the incidence of fraudulent or spam accounts on Twitter's network." Because Twitter, by its own admission, provided only insufficient data to conduct such an independent assessment,2 the June 29 Letter "endeavored to be even more specific, and to reduce the burden of the [original] request," by identifying a specific subset of high priority information responsive to Mr. Musk's prior requests, for Twitter to make available immediately.

Despite these repeated demands over the last two months, Twitter has still refused to disclose most of the data and information requested by Mr. Musk, including, but not limited to:

Information about Twitter's auditing method for include spam and false accounts in mDAU. Twitter has yet to disclose most of the material sought by Mr. Musk in Sections 1.01-1.03 of the May 19 diligence request list, which is required for him to evaluate the incidence of fraudulent or spam accounts on its service. Mr. Musk reaffirmed this long-standing desire for details on Twitter's sample technique for identifying fraudulent accounts in his June 29 Letter. The June 29 Letter identified specific data required for Mr. Musk to independently verify Twitter's representations about the number of mDAU on its platform, including, but not limited to: (1) daily global mDAU data since October 1, 2020; (2) information about the sampling population for mDAU, including whether the mDAU population used for auditing spam and false accounts is the same mDAU population used for quarterly reporting; and (3) outputs of each step of the t This material should have been supplied in response to Mr. Musk's first diligence request, therefore a new request along these lines should not have been required. However, Twitter has yet to release any of this information.

Twitter's procedure for detecting and suspending spam and fraudulent accounts is detailed here. The June 29 Letter also reiterated requests for data specifically identified in Sections 1.04-1.05 of the May 19 diligence request list regarding Twitter's methodology and performance data relating to the identification and suspension of spam and false accounts, including, but not limited to, information regarding account suspensions, including information sufficient to identify daily numbers of account suspensions. Furthermore, Twitter's representatives indicated for the first time during the June 30, 2022 call that the workflow and processes for detecting spam and false accounts in the mDAU population are distinct and distinct from the workflow and processes for identifying and suspending accounts in violation of Twitter's policies. During that discussion, Twitter said that it would not be prepared to provide details about the methods used to detect and suspend such accounts.

Daily mDAU measurements over the last eight (8) quarters. Mr. Musk reaffirmed his request for "access to the sample set utilized and computations done, as well as any associated reports or analysis, to corroborate Twitter's assertion that less than 5% of its mDAUs are fake or spam accounts" on June 17, 2022 (the "June 17 Letter"). Mr. Musk asked Twitter to supply "daily measurements of mDAU for the prior eight quarters, and to the present." This information is derived from the material requested by Mr. Musk in Sections 1.01-1.03 of the diligence request list dated May 19, 2018. Although Twitter gave some summary statistics about the mDAU estimates, it did not disclose the full daily measurements as required.

Materials pertaining to Twitter's mDAU computations. Mr. Musk sought a range of board papers and conversations pertaining to Twitter's mDAU measure, its computation of the number of spam and fraudulent accounts, its disclosure of the mDAU metric, and the company's revelation of the number of spam accounts on the site in his June 17 Letter. In response to this request, Twitter submitted an inadequate data set and did not offer information necessary for Mr. Musk to conduct an independent evaluation of Twitter's board and management's grasp of its mDAU measure.

Materials about Twitter's financial situation. Mr. Musk is entitled to "all information concerning the business... of the Company... for any reasonable business purpose related to the consummation of the transactions" under Section 6.4 of the Merger Agreement, and to information "reasonably requested" in connection with his efforts to secure the debt financing required to consummate the transaction under Section 6.11 of the Merger Agreement. Mr. Musk sought a number of board information on June 17th, including a functioning, bottoms-up financial model for 2022, a budget for 2022, an updated draft plan or budget, and a working copy of Goldman Sachs' valuation model underpinning its fairness conclusion. Twitter has only published a pdf version of Goldman Sachs' final Board presentation.

In conclusion, despite Mr. Musk's repeated, specific explanations intended to ease Twitter's identification, collection, and disclosure of the most relevant information sought in Mr. Musk's initial requests, Twitter has not given information that Mr. Musk has asked for almost two months.

While Twitter has offered some information, it has come with strings attached, such as usage restrictions or other artificial formatting characteristics, making some of the material only marginally helpful to Mr. Musk and his advisers. For example, when Twitter ultimately granted access to the eight developer "APIs" specifically requested by Mr. Musk in the May 25 Letter, those APIs had a rate restriction lower than what Twitter offers to its top commercial clients. Twitter only granted Mr. Musk the same degree of access as some of its customers when we stated that restricting the rate restriction precluded Mr. Musk and his advisers from doing the analysis that he desired in any reasonable amount of time.

Furthermore, regardless of the rate limit, the APIs had an artificial "ceiling" on the number of queries that Mr. Musk and his team could run—an flaw that originally precluded Mr. Musk and his advisers from finishing an examination of the data in any acceptable amount of time. Mr. Musk brought up the issue in the first paragraph of the June 29 Letter: "we have just been informed by our data experts that Twitter has placed an artificial cap on the number of searches our experts can perform with this data, which is now preventing Mr. Musk and his team from doing their analysis." That limit was eliminated on July 6, after Mr. Musk sought it for the second time.

Twitter has violated Sections 6.4 and 6.11 of the Merger Agreement by refusing to produce information that Mr. Musk has requested since May 9, 2022.

Mr. Musk did not forgo his right to access Twitter's data and information just because he decided not to seek this data and information prior to entering into the Merger Agreement, contrary to popular belief. Indeed, he secured access and information rights inside the Merger Agreement so that he could analyze data and information critical to Twitter's business before funding and closing the merger.

Because Twitter has been aware of its violation since at least June 6, 2022, any cure time provided by the Merger Agreement has already expired. As a result, Mr. Musk now exercises X Holdings I, Inc.'s right to terminate the Merger Agreement and abandon the transaction envisaged by it, and this letter serves as official notice of X Holdings I, Inc.'s cancellation of the Merger Agreement under Section 8.1(d)(i).

In addition to the above, Twitter seems to be in violation of the Merger Agreement because it contains substantially incorrect claims. In particular, Twitter indicated in the Merger Agreement that no records filed with the United States Securities and Exchange Commission since January 1, 2022 included any "untrue statement of a material fact" (Section 4.6(a)). In such filings, Twitter has repeatedly stated that: "We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter," and "After we determine an account is spam, malicious automation, or fake, we stop counting it in our mDAU, or other metrics." Mr. Musk agreed to enter into the Merger Agreement based on this representation in the Merger Agreement (as well as Twitter's many public pronouncements addressing fraudulent and spam accounts in publicly filed SEC papers). Mr. Musk has the right to terminate the Merger Agreement if these significant claims are shown to be untrue.

Although Twitter has not yet supplied Mr. Musk with all information that would allow him to conduct a thorough and comprehensive analysis of spam and fraudulent accounts on Twitter's network, he has been able to evaluate the veracity of Twitter's disclosure of its mDAU. While this investigation is continuing, all evidence point to numerous of Twitter's public statements about its mDAUs being incorrect or materially misleading. First, although Twitter has regularly stated in public filings that "fewer than 5%" of its mDAU are fraudulent or spam accounts, it seems that Twitter is significantly understating the amount of spam and false accounts reflected in its mDAU figure based on the facts disclosed to far. Preliminary review of the information given by Twitter by Mr. Musk's advisers leads Mr. Musk to suspect that the number of fraudulent and spam accounts included in the stated mDAU total is much more than 5%. Second, Twitter's statement that it stops counting phony or spam users in its mDAU when those users are determined to be fake seems to be incorrect. Instead, we believe, based on Twitter's assertions during a call with us on June 30, 2022, that Twitter includes suspended accounts—and therefore known to be fraudulent or spam—in its quarterly mDAU count even though it is aware that the suspended accounts were included in mDAU for that quarter. Finally, Twitter said that it is "constantly working to enhance our capacity to estimate the overall number of spam accounts and delete them from our mDAU calculation..." However, Twitter's method for determining mDAU, as well as the proportion of mDAU composed of non-monetizable spam accounts, looks random and ad hoc. It would be incorrect and deceptive to claim that Twitter has a logical procedure for determining mDAU when the contrary is true.

Twitter's assertion in the Merger Agreement about the accuracy of its SEC reports about fraudulent and spam accounts may have caused, or is reasonably anticipated to produce, a Company Material Adverse Effect, which may be utilized to terminate the Merger Agreement. While Mr. Musk and his advisers continue to research the precise nature and scope of this incident, Mr. Musk has reason to suspect that the real number of fraudulent or spam accounts on Twitter's network is far larger than the less than 5% indicated by Twitter in its SEC filings. Given that advertising account for over 90% of Twitter's income, the genuine mDAU figure is an important component of the company's operation. As a result, if Twitter has understated the number of fake or spam accounts on its network, this may constitute a Company Material Adverse Effect under Section 7.2(b)(i) of the Merger Agreement. Mr. Musk is also reviewing the company's recent financial performance and revised outlook, as well as whether the company's declining business prospects and financial outlook constitute a Company Material Adverse Effect, which would provide Mr. Musk with a separate and distinct basis for terminating the Merger Agreement.

Finally, Twitter failed to meet its requirements under Section 6.1 of the Merger Agreement to seek and acquire agreement before departing from its responsibility to operate its business in the regular course and "maintain substantially intact the key components of its present business organization." Twitter's termination of two critical, high-ranking workers, its Revenue Product Lead and General Manager of Consumer, as well as its announcement on July 7 that it was cutting off a third of its talent acquisition team, violates the usual course rule. Twitter has also implemented a broad recruiting freeze, which includes reconsidering outstanding employment offers. Furthermore, three Twitter executives have departed after the Merger Agreement was signed: the Head of Data Science, the Vice President of Twitter Service, and the Vice President of Product Management for Health, Conversation, and Growth. The Company has not obtained Parent's approval for modifications in its business operations, including the precise adjustments described above. As a result, the Company's conduct constitute a substantial violation of Section 6.1 of the Merger Agreement.

As a result of all of the foregoing, Mr. Musk hereby exercises X Holdings I, Inc.'s right to terminate the Merger Agreement and abandon the transaction contemplated by it, and this letter serves as formal notice of X Holdings I, Inc.'s termination of the Merger Agreement in accordance with Section 8.1(d)(i) thereof.

Sincerely,

Mike Ringler /s/
Skadden, Arps, Slate, Meagher & Flom LLP's Mike Ringler

* * *

All due respect to Elon and his legal firm, all of the foregoing is nonsense, and the only thing that counts is his signature on the original merger deal, where he surrendered all rights. It is now up to the Twitter board of directors to determine how to proceed.

TWTR stock fell 7% after hours on a result that everyone should have anticipated by now: the real fun starts now.