Elon Musk Threatens to call off 44 Billion Dollar Twitter deal

Elon Musk Threatens to call off 44 Billion Dollar Twitter deal

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Elon Musk has threatened to withdraw his $44 billion bid for Twitter, claiming that the company has refused to provide him with information about its spam bot and fake accounts.

In a letter to Twitter dated Monday, Tesla and SpaceX CEO Elon Musk's lawyers issued the threat, which the company disclosed in a filing with the US Securities and Exchange Commission.

Musk has repeatedly requested the information since May 9, about a month after his offer to buy the company, so he can assess how many of the company's 229 million accounts are fake, according to the lawyers.

According to Twitter CEO Parag Agrawal, the company has consistently estimated that less than 5% of its accounts are spam. Musk, on the other hand, has disputed this, claiming in a May tweet, without providing evidence, that 20% or more of the claims are false.

Twitter Inc. shares fell 1.5 percent on Monday, likely incensing Twitter shareholders who sued Musk late last month for allegedly deflating the stock price. Twitter's stock has dropped by more than 20% in the last month.

In a statement released Monday, Twitter said it has been cooperating with Musk in sharing information "in accordance with the terms of the merger agreement" and that the deal is in "the best interest of all shareholders."

It went on to say, "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."

In April, Musk agreed to buy Twitter for $54.20 per share. Several of Musk's subsequent actions, including a public spat with Twitter CEO Jack Dorsey over the fake accounts on Twitter  have prompted some analysts to wonder whether the billionaire intends to use his loud complaints to negotiate a lower deal price or even walk away entirely.

According to Musk's lawyers, Twitter has only offered to provide details about the company's testing methods. However, they argue that this is "equivalent to refusing Mr. Musk's data requests" and is a "material breach" of the merger agreement, which gives Musk the option to cancel the deal if he so desires.

"This is a clear material breach of Twitter's obligations under the merger agreement," the letter states, "and Mr. Musk reserves all rights arising therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement."

Musk wants access to the underlying data so that he can independently verify Twitter's allegedly lax methodologies.

The Twitter sale agreement allows Musk to back out of the deal if the company has a "material adverse effect." This is defined as a change that has a negative impact on Twitter's business or financial situation. Twitter has maintained its commitment to the deal throughout, despite the fact that a shareholder vote has yet to be scheduled.

Musk said last month that he put the deal on hold unilaterally, which experts said he couldn't do. He could be liable for a $1 billion breakup fee if he walks away.

According to Brian Quinn, a law professor at Boston College, Musk's latest move demonstrates that he is "looking for a way out of the deal or something that will get leverage for a renegotiation of the price." Quinn, however, believes it is unlikely to hold up in court because he has already waived his right to request additional due diligence.

Musk, who has over 96 million Twitter followers and whose name and likeness are frequently imitated by fake accounts promoting cryptocurrency scams, has been fixated on the bot problem for a long time. Musk appears to believe that bots are a problem for most other Twitter users, as well as advertisers who buy Twitter ads based on the number of real people they expect to reach.

Meanwhile, Musk's lawyers argue that he is entitled to information about the core of Twitter's business model in order to plan the transition to his ownership. Musk's team says the company is obligated to provide data for any reasonable business purpose needed to complete the deal, citing a June 1 letter from Twitter in which the company stated that it only has to provide information related to closing the sale.

Edited By: Admin
Published On: Jun 07, 2022