Elon Musk has threatened to back out of his plan to buy Twitter, claiming that the social media giant is’resisting and blocking’ his access to information on spam and bogus accounts.
He claimed Twitter had broken its duties in a “clear significant violation,” and that he “reserves all rights” to terminate the merger deal.
Musk had previously stated that he would put the transaction ‘temporarily on hold’ while waiting for the company to give data on the percentage of fraudulent accounts it had.
Last month, SpaceX CEO Elon Musk stated that he ‘cannot move forward’ with his $44 billion platform purchase unless he receives the needed data.
Musk has speculated that spam bots could make up at least half of Twitter’s users, more than 10 times the company’s official estimate.
Musk’s lawyer stated in a letter to Twitter on Monday that the terms of the billionaire’s acquisition deal require the platform to deliver the sought data, which he purportedly has requested several times since May 9.
He also refuted the company’s contention that it is only compelled to furnish information for the ‘narrow purpose’ of concluding the transaction.
‘Musk has the right to request, and Twitter has the obligation to give, information and data for, among other things, ‘any reasonable business purpose relating to the closing of the deal,” according to the letter.
‘Musk believes Twitter is openly refusing to comply with its merger agreement responsibilities, raising the possibility that the business is concealing requested data out of worry for what Musk’s own analysis suggests.
Last month, Musk claimed that he wanted to pause on the purchase deal to verify false or spam accounts represented fewer than 5 percent of the company’s 229 million users during the first quarter, as Twitter reported.
If Twitter’s reporting was accurate, that would mean that there are fewer than 11.4 million fake accounts that are targeted for ads.
The billionaire said he and his team wanted to conduct their own audit of 100 Twitter followers to check how many are bots and spam accounts.
If Twitter is ‘confident’ in its reported spam predictions, the billionaire wrote in his letter that he ‘does not understand’ the company’s reluctance to allow him to ‘independently evaluate those numbers.’
‘As a potential Twitter owner, Musk has a clear right to the requested information in order to plan for the transition of Twitter’s company to his ownership and to assist deal finance.’ To do both, he’ll need a thorough understanding of Twitter’s primary economic model—its active user base,’ according to the letter.
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In any case, Musk is not compelled to explain his request for the data or to agree to the new constraints that the firm has tried to put on his contractual access to the data.
‘At this point, Musk feels Twitter is openly refusing to comply with its merger agreement responsibilities, raising suspicions that the firm is hiding the necessary data out of fear of what Musk’s own study of the data may reveal.’
For years, Twitter has published its bot estimates to the Securities and Exchange Commission in the United States, while also warning that the estimate could be too low.
Financial experts say Musk can’t put the deal on hold unilaterally, but that hasn’t prevented him from acting as if he can.
The Twitter sale agreement allows Musk to get out of the deal if there is a ‘material adverse effect’ caused by the company. It defines that as a change that negatively affects Twitter’s business or financial conditions.
If he walks away from the merger agreement, Musk could be on the hook for a $1 billion breakup fee