June 6 (Reuters) – Elon Musk warned Twitter Inc (TWTR.N) on Monday that he might walk away from his $44 billion deal to acquire the social media company if it fails to provide the data on spam and fake accounts that he seeks.
This was not the first time Musk had suggested publicly his acquisition of Twitter may not happen. But the warning, delivered in a letter from Musk’s lawyers to Twitter’s chief legal officer, Vijaya Gadde, marked an escalation. It accused Twitter of being in “material breach” of its deal obligations.
Musk’s threats to tear up the deal have coincided with a plunge in many technology stocks – including the electric car maker that he leads, Tesla Inc (TSLA.O) – amid concerns over an economic slowdown and higher interest rates in the face of raging inflation.
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Twitter shares ended down 1.5% at $39.57 on Monday, a large discount to the agreed $52.20 deal price, as investors bet Musk will either convince Twitter to agree to a lower deal price or walk away.
In the letter to Twitter, Musk’s lawyers reiterated his request for details on bot accounts and said he reserved all rights to terminate the acquisition as the company was in a “clear material breach” of its obligations by not providing him with the information.
Twitter responded that it planned to enforce the completion of the deal on the agreed terms. “Twitter has and will continue to cooperatively share information with Musk to consummate the transaction in accordance with the terms of the merger agreement,” the company said in a statement.
A self proclaimed free-speech absolutist, Musk has said one of his priorities will be to remove “spam bots” from the platform.
He tweeted that the Twitter deal was “temporarily on hold” in mid-May, saying he will not move forward with the offer until the company showed proof that spam bots account for less than 5% of its total users. He has said he believes spam bots constitute at least 20% of the user base. read more
Independent researchers have projected that 9% to 15% of the millions of Twitter profiles may be bots. read more
In his letter, Musk said he needs the data to conduct his own analysis of Twitter users because he did not believe in the company’s “lax testing methodologies.” Twitter has said it stands by its projections and it cannot provide proprietary information on how it produces them.
“He is trying to walk away from the Twitter deal, this is the first shot across the bow,” Wedbush analyst Dan Ives said.
Legal experts have told Reuters the disclaimers Twitter used in its projections on spam accounts give it some protection against potential lawsuits, be they from Musk over the deal or shareholders over the accuracy of the company’s regulatory statements.
Even if Twitter’s estimate is off, Musk would have to show that the San Francisco-based company was seeking to willfully mislead – a high legal threshold. read more
“It’s fairly obvious that Musk has buyer’s remorse and he is trying whatever to get a…
Read More News: Musk threatens to tear up Twitter deal over ‘material breach’