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Elon Musk Officially Seeks to Terminate Twitter Takeover Deal



Elon Musk Launches Hostile Takeover Bid for Twitter

It seemed inevitable, and now, Elon Musk has officially filed a motion with the SEC to terminate his $44 billion takeover of Twitter, based on Twitter’s failure to provide accurate information on the number of fake accounts on its platform.

In a letter filed on behalf of Musk and his investment partners at Morgan Stanley, Musk is seeking to cancel the acquisition due to a ‘material breach of multiple provisions’ of the original merger agreement.

As per the filing:

‘[Twitter] 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 (as that term is defined in the Merger Agreement).”

Musk’s team says that, despite repeated requests for qualifying information, Twitter had failed to provide them with the data required to make an accurate and true assessment of the number of fake accounts on its platform.

“While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consummation of the transaction,” Twitter has not complied with its contractual obligations.”

Musk’s team says that it has been seeking more information from Twitter for nearly two months, with Twitter only providing limited access to the required data, in violation of the terms.


“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”

In total, Musk’s team says that Twitter has failed to provide them with information on:

  • Information related to Twitter’s process for auditing the inclusion of spam and fake accounts in mDAU
  • Information related to Twitter’s process for identifying and suspending spam and fake accounts
  • Daily measures of mDAU for the past eight (8) quarters
  • Board materials related to Twitter’s mDAU calculations
  • Materials related to Twitter’s financial condition

Because Twitter has failed to comply with these requests within a reasonable time period, that, Musk’s team says, is a violation of the deal’s terms, and is therefore reason enough to cancel the agreement.

The letter also notes that Musk’s team is still unconvinced of Twitter’s metrics, with its own analysis of Twitter’s expanded usage data, which it provided last month, showing that fake accounts are more prevalent in the app than Twitter claims:

Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%.”

Musk’s team also says that, based on its discussions with company execs, its understanding is that Twitter includes accounts that have been suspended within its active user metrics, which it says would see Twitter still including known fake and spam accounts within its publicly reported figures. Musk’s team also says Twitter’s process for determining the percentage of fake accounts ‘appears to be arbitrary and ad hoc’, further clouding their metrics.

Based on these ongoing questions, and Twitter’s failure to provide adequate justifications for such, Musk and Co. want to pull out, which will now put the onus on the SEC and/or the courts to decide whether the reasoning here is justified, and how it moves forward, or not, with the merger.

Which could be a disaster for Twitter, which has already cut executive jobs and shifted its entire business approach, in preparation for a pending Musk takeover.

Indeed, this week, reports suggested that Twitter CEO Parag Agrawal is ‘willing to go to war’ in order to make Elon Musk follow through with his takeover bid, even if Musk looks to back out of the process. Agrawal would personally be in for a big payday if the Musk deal were to go through – but more than that, the deal falling apart now would raise significant questions over Twitter’s future, and its capacity, as a business, to become a more viable, valuable proposition.


The overriding consensus thus far has been that Musk will eventually have to go through with his Twitter takeover push either way, because Musk waived various due diligence measures in his initial offer, in order to expedite the transaction,

But in today’s letter, Musk’s team has also provided a note of clarity on this point:

Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.”

It seems, then, that a stand-off is coming, with Musk now making the move that many had expected, which will force Twitter to respond and provide a detailed explanation of such to the SEC.

Twitter board Chairman Bret Taylor was quick to respond to the news:

Will Musk be able to get out of the deal, or will Twitter indeed be able to force Musk to pay up, based on the terms of the agreement?

It looks like things are about to get really ugly, which can only be bad for Twitter as a business.


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Snapchat Launches Snapchat+ Service in India, at a Significantly Lower Price Point



Snapchat Officially Launches its New 'Snapchat+' Subscription Program

This is one way to boost your ‘average revenue per user’ stats.

A month after launching its new Snapchat+ subscription offering to users in predominantly western markets, Snap is now also making the option available in India – though at a much lower price point than the initial push.

Snapchat+, which offers exclusive access to new and experimental features, including alternative icons, profile badges, additional analytics and also a desktop version of the app, is available to users in the US, Canada, the UK, France, Germany, Australia, New Zealand, Saudi Arabia, and UAE for $US3.99 per month (or local equivalent).

But in India, Snapchat+ will be launched at a starting price of 49 – which converts to around $US0.62.

That seems like a fairly big discount, and according to reports, Snapchat+ in India will offer access to all the same features and tools that the general offering has.

So why so cheap?

Well, for one, it’s a different market, and Snap needs to price its offerings in line with the local economy. Snapchat+ also doesn’t cost Snap anything to produce, as such, as there are no production costs built in (other than system maintenance), so it has the flexibility offer variable price points, if it so chooses.


And as noted, it could crucially be a way for Snap to enhance its revenue per user stats, which, right now, reflect its strong reliance on the North American market for revenue.

Snapchat Q2 2022

If Snap can even that out, and show how it can become a more important, valuable platform in other markets, and make money from its presence, that could help to improve its market standing, while also bringing in additional revenue – which would also be income that’s not reliant on ad spend. And like all social apps, Snap’s ad revenue has taken a hit due to Apple’s ATT update.

It seems like a logical and sensible approach, helping to make the app more sticky with Indian users, and ideally, increasing adoption and revenue intake in another key region.

Snap has seen significant growth in India since it upgraded its Android app back in 2019. Android is by far the most popular OS in the Indian market, and as local connectivity and tech continues to evolve, that’s also opened the door for Snapchat to establish a bigger local presence, while the banning of TikTok in 2020 also pushed Indian users to find alternatives, further enhancing Snap’s appeal.

Indeed, Snapchat is now reportedly up to 144 million daily actives in the Indian market, overtaking the US (108m) as its top country by user adoption – so while it’s not the highest earning region for the company, it is now, arguably, the most important, which is why the expansion of Snapchat+ makes sense.

And while western users may be annoyed that they have to pay more for these features, it could be a clever push by Snap, which could end up paying off big time for the app.  

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