In his latest attack on Twitter, delivered via a letter from his lawyer, Elon Musk accused the company of “refusing to comply” with his requests for information about bots and fake accounts, and threatened to pull his $44 billion takeover offer.
Twitter agreed to accept Musk’s unsolicited bid in April. The weeks since the agreement have seen a steady stream of complaints from Musk, often via his Twitter account. Given that the Twitter board was unable to identify alternative suitors when Musk’s bid surfaced two months ago, Musk has gained leverage and has sought to whittle down the final price of the company. Another element in the mix is a decline in the share price of Tesla, the electric vehicle firm run by Musk, as investors have become concerned about Musk being spread thin. He also heads SpaceX.
Musk has focused attention on the social network’s number of fake accounts, or “bots” and had asked the company to provide data about the issue.
Musk’s attorney, Mike Ringler, signaled his dissatisfaction with Twitter in a letter this morning to Chief Legal Officer Vijaya Gadde. Ringler’s main point was that Musk is entitled to the information he requested because of the financing arrangements he has put in place to complete the transaction. A group of 19 investors have stepped up to back the acquisition. Musk has agreed to pay $1 billion to Twitter if he decides to walk away from the deal — a rich breakup fee but not a major obstacle for Musk, who has become the wealthiest person in the world thanks in large part to Tesla’s booming stock price.
“Mr. Musk is not required to explain his rationale for requesting the data, nor submit to the new conditions the company has attempted to impose on his contractual right to the requested data,” Ringler wrote in the letter. “At this point, Mr. Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement.”
Since May 9, Ringler asserted, the Musk has made numerous requests for information about how many of the 229 million total accounts on Twitter are fake. Instead of hard numbers, he added, the company has instead only offered to shed light on how it analyzes accounts to determine their authenticity.
“This is a clear material breach of Twitter’s obligations under the merger agreement,” the letter continued, “and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”
Despite a positive start to the week for the broader stock market, Twitter shares slumped 4% in morning trading to near $38 a share on the news of the letter. They have lost more than one-quarter of their value since the deal was announced on April 25. The all-cash transaction pegs Twitter’s value at $54.20 a share.
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