Elon Musk issued his most direct threat yet to back out of his Twitter purchase (TWTR) on Monday, openly accusing the social media company of violating the merger agreement by failing to provide the data he requested about spam and fake accounts. .
In a letter to Twitter’s head of legal, policy and trust, Vijaya Gadde, Musk claimed that Twitter is “actively resisting and thwarting your rights to information,” as described by the settlement.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Musk reserves all resulting rights, including his right not to consummate the transaction and his right to terminate the merger agreement,” wrote an attorney representing Musk. the company.
Musk demanded that Twitter provide information about its testing methodologies to support its claims that bots and fake accounts make up less than 5% of the platform’s active user base, a number the company has consistently claimed for years in standardized public disclosures. Musk also asked to do his own independent assessment based on Twitter data.
Twitter shares were down 5% in early Monday trading. Even before the latest development, Twitter shares were trading well below Musk’s takeover bid of $54.20 a share, likely indicating investor skepticism about the deal. The company did not immediately respond to a request for comment on the letter. Twitter CEO Parag Agrawal has maintained his company’s longstanding spam metric.
Musk claimed that the true number of spam accounts is likely much higher, potentially as high as 90%. Musk previously said the acquisition “cannot go ahead” until the company provides “proof” of its spam metric.
Some Wall Street analysts said this reaction could be a case of buyer’s remorse and an effort to pressure Twitter to negotiate a lower price for the $44 billion deal. There were questions from the start about how Musk would finance the acquisition.
Social media stocks have also been hit in recent weeks amid broader market jitters. Monday’s letter speculated that Twitter may be “withholding requested data out of concern for what Musk’s own analysis of that data will reveal.”
The letter also alleged that Twitter sought to restrict access to the information by interpreting the merger agreement narrowly, so providing the information would be outside the scope of Twitter’s contractual requirements. But the letter charged that even by Twitter’s strict definitions, it still has an obligation to provide the information.
In a separate securities filing, Twitter previously disclosed that Musk waived a due diligence clause in the deal that could have made it easier to drop the deal; without it, Musk could face tougher escalation and the prospect of litigation. In making the deal to buy Twitter, Musk made spam bots on the platform a central issue. He vowed to defeat them from “trying to die”, even describing Twitter as vital to “the future of civilization”.
Translated matter from CNN Business.
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