Elon Musk has threatened to walk away from his $44bn takeover of Twitter, accusing the social media company of “thwarting” his requests to learn more about its user base, reports AP News.
Deal on hold
In a letter filed with regulators, Mr Musk said he was entitled to do his own measurement of spam accounts. The letter formalises a dispute that has simmered for weeks after Mr Musk declared the deal “on hold” pending further information.
Twitter has defended its estimates. But Mr Musk has said he believes spam and fake accounts represent a far greater share than the less than 5% of daily users that Twitter reports publicly.
“As Twitter’s prospective owner, Mr Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model – its active user base,” lawyer Mike Ringler wrote in the letter.
“Based on Twitter’s behaviour to date, and the company’s latest correspondence in particular, Mr Musk believes the company is actively resisting and thwarting his information rights,” the letter said.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”
Doubts about the takeover
The dispute has raised more doubts about the future of the takeover, which Twitter’s board approved in April.
Twitter has said Mr Musk waived typical rights to due diligence in his eagerness to clinch the deal. But last month, Mr Musk raised the issue of the spam accounts on social media, saying the deal was on hold but he remained committed to the acquisition.
Mr Musk is on the hook for a $1bn break-up fee if he opts out of the deal, as is Twitter. Analysts have said the Tesla boss might be using the issue to try to renegotiate the price or even walk away. They said Mr Musk’s decision to raise the issue on social media was unconventional, making it difficult to read how serious he was.
When Twitter chief executive Parag Agrawal defended the company’s process in a series of tweets, Mr Musk responded with a poo emoji.
Reasonable cooperation
Mr Musk has said he believes that bots could account for 20% or more of Twitter users. The letter, filed with the US Securities and Exchange Commission, confirms that the two sides have gone back and forth on the issue since early May.
It says Mr Musk merits “reasonable cooperation” as he tries to line up financing for the deal.
“Twitter’s latest offer to simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr Musk’s data requests,” the letter says.
“Twitter’s effort to characterize it otherwise is merely an attempt to obfuscate and confuse the issue.”
Intense scrutiny from regulators
Mr Musk’s plans for the company have drawn intense scrutiny from regulators around the world, while raising some alarm among investors of electric car company Tesla and rocket firm SpaceX, which Mr Musk also leads.
He has lined up outside investors to help pay for the takeover and is also using equity and loans backed by his Tesla shares, which have been hit in recent weeks as market turmoil wipes billions from the values of companies including Tesla.
The decline has also made Mr Musk’s offer of $54.20 per share for Twitter look even more generous. On Monday, Twitter shares were trading below $39, down 3%. They have yet to return to the highs they hit last month shortly after Mr Musk revealed he had purchased about 9% of the firm’s shares.
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Source: AP News
