Elon Musk accuses Twitter of ‘actively resisting’ his attempts to buy it.
Elon Musk has threatened to pull out of his $44 billion acquisition of Twitter, claiming that the social media business has “thwarted” his attempts to learn more about its user base. Mr. Musk said in a letter to regulators that he had the right to measure spam accounts on his own.
The letter puts an end to a spat that has been simmering for weeks since Mr. Musk placed the acquisition “on hold” for more details.
Twitter has come out in defense of its figures. Mr. Musk, on the other hand, has stated that he believes spam and fraudulent accounts account for significantly more than the less than 5% of daily users reported by Twitter.
“Mr. Musk, as the prospective owner of Twitter, has a clear right to the requested information in order to prepare for the transition of Twitter’s company to his own and to facilitate deal finance. To achieve both, he’ll need a thorough understanding of Twitter’s primary business model, which is its active user base “Mike Ringler, a lawyer, prepared the letter.
“Based on Twitter’s behavior to date, and in particular the business’s most recent correspondence,” the letter stated, “Mr. Musk feels the firm is deliberately contesting and undermining his information rights.”
“This is a clear substantial breach of Twitter’s merger agreement requirements, and Mr. Musk reserves all rights arising from it, including the right not to conclude the deal and the right to cancel the merger agreement,” according to the statement.
The squabble has cast fresh uncertainty on the takeover, which was approved by Twitter’s board of directors in April.
“In order to complete the acquisition in accordance with the terms of the merger agreement, Twitter has and will continue to cooperatively exchange information with Musk,” the firm stated in a statement.
Mr. Elon Musk forfeited usual due diligence rights in his haste to close the acquisition, according to Twitter, which added that it intended to execute the takeover at the agreed price and terms.
Mr. Elon Musk initially addressed the problem of the spam accounts on social media last month, saying the deal was on hold but he remained committed to the acquisition. If he opts out, he faces a $1 billion breakup fee and probable litigation.
Mr. Elon Musk has stated that he believes bots account for 20% or more of Twitter users. The letter, which was filed with the Securities and Exchange Commission in the United States, confirms that the two parties have been back and forth on the matter since early May.
It claims that Mr. Musk deserves “reasonable cooperation” as he seeks funding for the deal.
“Twitter’s current promise to simply provide additional details regarding the company’s own testing processes, whether through written documents or verbal explanations,” the letter states, “is comparable to denying Mr. Musk’s data requests.”
“Twitter’s attempt to characterize it in a different way is nothing more than an attempt to obfuscate and complicate the subject.”
He’s lined up outside investors to help fund the buyout, as well as utilizing equity and loans guaranteed by his Tesla stock, which has been hit hard in recent weeks as market turbulence has wiped billions off the value of companies like Tesla.
Mr. Elon Musk’s offer of $54.20 per share for Twitter has become even more generous as a result of the fall. Twitter shares were trading below $39 on Monday, down 3%, but they eventually recovered some ground. They have failed to return to the highs reached last month, shortly after Mr. Musk announced he had bought approximately 9% of the company’s stock.
The letter is the “strongest warning yet” that Tesla founder Elon Musk is willing to walk away, according to Susannah Streeter, senior financial and markets analyst at Hargreaves Lansdown.
“This is a move Twitter investors have been anticipating for weeks: Elon Musk’s chaotic ruminations in tweets being condensed into an official letter to authorities,” she added. “However, given the increased volatility in the tech sector since Mr. Musk’s offer, it’s highly likely he’s looking for a lower price, even if Twitter provides the facts sought in support of its first study.”