Elon Musk has threatened to back out of his $44 billion ($61 billion) bid to buy Twitter, accusing the company of refusing to give him information about its spam bot and fake accounts.
- Elon Musk’s lawyers tweet a letter saying the company denied ‘Mr. Musk’s requests for data’
- Twitter says it ‘has and will continue to cooperatively share information with Mr. Musk’
- Twitter estimates that less than 5% of accounts are fake, Mr. Musk says more than 20% are
Lawyers for the CEO of Tesla and SpaceX made the threat in a letter to Twitter dated Monday, and Twitter disclosed it in a filing with the United States 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 said Twitter has always estimated that less than 5% of its accounts are fake. But Mr. Musk disputed that, saying in a May tweet that 20% or more was wrong.
Shares of Twitter Inc fell just under 3% on Monday, likely infuriating Twitter shareholders who filed suit against Mr Musk late last month for deflating the stock price . Twitter shares are down 23% in the past month.
Twitter said in a statement Monday that it “has and will continue to cooperatively share information with Mr. Musk to complete the transaction pursuant to the terms of the merger agreement.”
Mr. Musk agreed to buy Twitter for $54.20 a share in April. A number of Mr Musk’s actions since then, including a public spat with the Twitter CEO over fake accounts – on Twitter – have some pundits wondering if the billionaire wanted to cut the deal, or at least lower his offer.
Mr. Musk’s lawyers said in the letter that Twitter only offered to provide details of the company’s testing methods. But they argued it amounted to “denying Mr. Musk’s requests for data” and was a “material breach” of the merger agreement which gave Mr. Musk the right to rescind the deal if he so chooses. wished.
Mr. Musk wanted the underlying data to do its own verification of what he called Twitter’s lax methodologies.
Twitter’s sale agreement allows Mr Musk to opt out of the deal if there is a “material adverse effect” caused by the company. He defined this as a change that negatively affected Twitter’s business or financial terms.
Twitter has said throughout that it is proceeding with the deal, although it did not expect a shareholder vote on it.
Billion Dollar Breakup Fee
Last month, Mr Musk said he had unilaterally suspended the deal, which experts said he could not do. If he leaves, he could be liable for $1 billion in severance pay.
Mr. Musk’s latest move showed how he’s “looking for a way out of the deal or something that will have leverage for a price renegotiation,” said Boston College law professor Brian Quinn.
But Dr Quinn said he was unlikely to resist in court because he had already waived his ability to seek further due diligence.
“At some point, Twitter’s board will get tired of it and file a lawsuit (asking a judge to force Musk to stick with the deal).”
Twitter has disclosed its bot estimates to the US Securities and Exchange Commission for years, while warning that its estimate may be too low.
“While Twitter is confident in its published spam estimates, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently assess these estimates,” the letter said, adding that he agreed. not to disclose or store the data.
A long-standing fixation
The bot problem is a long-standing fixation for Mr. Musk, one of Twitter’s most active celebrity users, whose name and likeness is often mimicked by fake accounts promoting cryptocurrency scams. change.
Musk seems to think these bots are also a problem for most other Twitter users, as well as advertisers who serve ads on the platform based on how many real people they expect to reach.
The letter signed by Mr Musk’s lawyer, Mike Ringler, reported a row over a June 1 letter from Twitter in which the company said it only had to give information relating to the closing of the sale.
He said Twitter was obligated to provide data for any reasonable business purpose necessary to enter into the agreement.
Twitter must also cooperate with Mr. Musk’s efforts to secure funding for the deal, including providing information “reasonably requested” by Mr. Musk, the letter said.
The letter claimed that Mr. Musk was not required to explain why he was requesting the data or submit to “new conditions that the company attempted to impose” on his right to obtain the figures.
He alleged that Mr. Musk was entitled to data about Twitter’s core business model so he could prepare for the transition to his ownership.
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