Musk Required Twitter to Disclose Financial Information Not Included in Signed Contract

Feature Image: HackerNoon’s Stable Diffusion AI, Prompt “financial information”

FACTUAL ALLEGATIONS

VI. Musk grasps for an out

C. Financial information

103. In seeking to manufacture a record of covenant breach, Musk seized not just on Section 6.4 but also on Section 6.11, which obligates Twitter to reasonably cooperate with Parent to facilitate arrangement of debt financing.

104. Throughout the post-signing period, Twitter’s advisors had been working with Musk’s representatives to furnish them relevant financial information about the company. These discussions had been productive under the supervision on Musk’s side of Bob Swan, a respected Silicon Valley financial professional and former CEO of Intel Corporation. Swan had been in regular contact with Segal, and had been leading defendants’ purported effort to consummate the debt financing.

105. Then, in his June 17 lawyer letter, Musk demanded a collection of financial information he claimed was necessary to “better understand the state of Twitter’s business and outlook, which is related to his acquisition plans and his financing for the transaction.” He demanded a “working, bottoms-up financial model for 2022,” budget plans with underlying modeling, and a “working copy” of Goldman Sachs’s “valuation model underlying its fairness opinion.” This demand is extremely unusual in merger transactions, and neither in conveying the demand nor at any time since have defendants pointed to a request from any lender that would justify it. Notably, Musk’s debt financing commitments are not conditioned on receipt of any financial information about Twitter other than that contained in its quarterly SEC filings. Ex. 2 § 1, E-2 (Ex. E) § 6.

106. Around the same time as the request, on June 21, 2022, Musk falsely represented in a Bloomberg interview that an item requiring resolution “before the transaction can complete” is “will the debt portion of the round come together?” As Musk well knew, financing expressly is not a condition to closing under the agreement.

107. Still, intent on facilitating the merger’s consummation, Twitter provided Musk with significant supporting detail for its proxy case projections, shared some of its financial plans, and gave him a copy of its bankers’ final presentation to Twitter’s board.