WASHINGTON (Parliament Politics Magazine) – Elon Musk has threatened to pull out of his $44 billion acquisition of Twitter, claiming that the social media business has thwarted his attempts to learn more about its user base.
Mr Musk said in a letter to regulators that he had the right to measure spam accounts on his own.
The letter puts an end to a spat that has been simmering for weeks since Mr Musk placed the acquisition “on hold” for more details.
Twitter has come out in defence of its figures.
Mr Musk, on the other hand, has stated that he believes spam and fraudulent accounts account for significantly greater than the less than 5% of daily users reported by Twitter.
As the potential owner of Twitter, Mr Musk had a clear right to the requested information in order to prepare for the transition of Twitter’s operations to his ownership and to assist transaction finance. To achieve both, he needed a comprehensive and accurate grasp of Twitter’s business model’s very core – its active user base, said lawyer Mike Ringler in the letter.
Basing this on Twitter’s behaviour to date, and in particular the business’s most recent correspondence, the letter stated, Mr Musk felt the firm was deliberately contesting and undermining his information rights.
That was a clear material infringement of Twitter’s merger agreement requirements, and Mr Musk reserved all rights arising from it, including the right not to complete the deal and the right to cancel the agreement, it said.
The dispute has cast fresh uncertainty on the takeover, which was approved by Twitter’s board of directors in April.
In order to complete the acquisition in accordance with the terms of the merger agreement, Twitter had and would continue to cooperatively exchange information with Musk, the firm stated in a statement.
Mr Musk forfeited usual due diligence rights in his haste to close the acquisition, according to Twitter, which added that it intended to execute the takeover at the agreed terms and price.
Mr Musk initially addressed the problem of the spam accounts on social media last month, saying though the deal was on hold, he remained committed to the acquisition. If he opts out, he faces a $1 billion break-up fee and probable litigation.
According to analysts, Tesla’s CEO may be using the situation to try and renegotiate the price or opt out of it. They claimed Mr Musk’s decision to bring the issue up on social media was unusual, making it difficult to gauge his seriousness.
Mr Musk responded with a poo emoji after Twitter CEO Parag Agrawal defended the company’s methodology in a series of tweets.
Mr Musk has stated that he believes bots account for 20% or more of Twitter users. The letter, which was filed with the Securities and Exchange Commission in the United States, confirms that the two parties have been back and forth on the matter since early May.
It claims that Mr Musk deserves “fair cooperation” as he tries to get funding for the deal.
Twitter’s current promise of simply giving additional details about the company’s own testing processes, whether through written documents or verbal explanations, the letter states, was comparable to denying Mr Musk’s data requests.
Twitter’s attempt to define it in a different way was nothing more than an attempt to obfuscate and complicate the subject, it said.
Mr Musk’s plans for the company have sparked significant scrutiny from regulators across the world, as well as some concern among investors in Tesla and SpaceX, both of which are lead by Mr Musk.
He’s lined up outside investors to help fund the buyout, as well as using equity and loans secured by his Tesla shares, which have been battered in recent weeks as market turbulence has wiped billions off the value of companies like Tesla.
Mr Musk’s offer of $54.20 per share for Twitter has become even more generous as a result of the fall. Twitter’s stock was trading below $39 on Monday, down 3%. They have failed to return to the highs reached last month, shortly after Mr Musk announced he had bought approximately 9% of the company’s shares.
The letter is the “strongest signal yet” that Tesla founder Elon Musk is willing to walk away, according to Susannah Streeter, senior financial and markets analyst at Hargreaves Lansdown.
That was a move Twitter investors had been anticipating for weeks: Elon Musk’s chaotic ruminations in tweets being condensed into an official letter to authorities, she added. However, given the increased volatility in the tech sector since Mr Musk’s offer, it was highly likely he was looking for a lower price, even if Twitter provided the facts sought in support of its first study, she added.