Elon Musk has threatened to walk away from his $44 billion ($61 billion) offer to buy Twitter, accusing the company of giving him information about its spam bot and fake accounts.
Most important points:
- Elon Musk’s lawyers sent a letter to Twitter saying the company refused “Mr. Musk’s data requests”
- Twitter says it has “and will continue to share information with Mr. Musk”
- Twitter estimates less than 5 percent of accounts are fake, Musk claims more than 20 percent are
Attorneys for the CEOs of Tesla and SpaceX expressed the threat in a letter to Twitter Monday, and Twitter disclosed it in a filing with the U.S. Securities and Exchange Commission.
The letter said Mr Musk had repeatedly requested the information since May 9, about a month after his offer to buy the company, so he could assess how many of the company’s 229 million accounts are fake.
Twitter CEO Parag Agrawal had said Twitter had consistently estimated that less than 5 percent of its accounts were fake. But Mr Musk has disputed that, claiming in a tweet from May that 20 percent or more was fake.
Shares of Twitter Inc fell just under 3 percent Monday, likely to the anger of Twitter shareholders who filed a lawsuit late last month against Mr. Musk for lowering the stock’s price. Shares of Twitter have fallen 23 percent in the past month.
Twitter said in a statement Monday that it “has and will continue to share information with Mr. Musk to complete the transaction in accordance with the terms of the merger agreement.”
Mr. Musk agreed to buy Twitter in April for $54.20 per share. A number of Mr Musk’s actions since then, including a public spat with Twitter’s CEO over the fake accounts — on Twitter — has led some pundits to question whether the billionaire wants to go through with the deal, or at least want his offer. to lower.
Musk’s attorneys said in the letter that Twitter had only offered to provide details about the company’s testing methods. But they argued that this “was tantamount to denying Mr. Musk’s data requests” and constituted a “material breach” of the merger agreement that gave Mr Musk the right to cancel the deal if he chose.
Mr. Musk wanted underlying data to do his own verification of what he believes were Twitter’s lax methods.
The Twitter sale agreement does allow Musk to withdraw from the deal if there is a “material adverse effect” caused by the company. It defined that as a change that negatively affected Twitter’s business or financial conditions.
Twitter has been saying all along that it was going ahead with the deal, though it hadn’t planned a shareholder vote on it.
Billion dollar breakout fee
Last month, Mr Musk said he had unilaterally put the deal on hold, which experts say couldn’t. If he does walk away, he could be on the hook for a $1 billion breakup fee.
Musk’s latest move showed how he’s “looking for a way out of the deal or something that will leverage price renegotiation,” said Brian Quinn, a law professor at Boston College.
But dr. Quinn said it was unlikely to hold up in court, as he had already waived his opportunity to request more due diligence.
“At some point, Twitter’s board will get tired of this and file a lawsuit (ask a judge to force Musk to stick to the deal).”
Twitter has disclosed its estimates of bots to the US Securities and Exchange Commission for years, but also warned that the estimate could be too low.
“If Twitter is confident in its published spam estimates, Mr. Musk does not understand that the company is reluctant to allow Mr. Musk to independently evaluate these estimates,” the letter read, adding that he agreed not to disclose the data. to create or save.
A long-lasting fixation
The bot issue has been a long-term fix for Mr. Musk, one of Twitter’s most active celebrities, whose name and likeness are often impersonated by fake accounts promoting cryptocurrency scams.
Musk seems to think that such bots are also a problem for most other Twitter users, as well as advertisers who place ads on the platform based on how many real people they expect to reach.
The letter signed by Mr. Musk’s attorney Mike Ringler pointed to an argument over a June 1 letter from Twitter in which the company said it only needed to provide information about closing the sale.
It said Twitter was required to provide data for any reasonable business purpose necessary to complete the deal.
Twitter must also cooperate with Musk’s effort to secure financing for the deal, including providing information “reasonably requested” by Musk, the letter said.
The letter stated that Mr. Musk was under no obligation to explain his rationale for requesting the data or to submit to “new terms that the company has tried to impose” on his right to get the numbers.
It claimed that Mr. Musk was entitled to the data on the core of Twitter’s business model so that he could prepare for the transition to his ownership.
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