DETROIT ( Associated Press) — Elon Musk is threatening to walk away with its $44 billion bid to buy Twitter, accusing the company of refusing to provide information about its spam bot accounts,
Lawyers for the Tesla and SpaceX CEOs made the threat in a letter to Twitter on Monday. That letter was included in a filing from Twitter with the US Securities and Exchange Commission.
The letter said that Musk has repeatedly sought information from May 9, about a month after his offer to buy the company, so that he can evaluate how many of the company’s 229 million accounts are bogus.
Shares of Twitter Inc. fell more than 3% on Monday, possibly angering Twitter shareholders, who filed a lawsuit against Musk late last month for undercutting the stock’s price., Twitter shares are down 23% in the past month.
A message was left early Monday seeking comment from Twitter.
The lawyers said in the letter that Twitter only offered to provide details about the company’s methods for determining the number of accounts. But he argues that it is “the same as denying Mr Musk’s data requests.” Musk wants the underlying data so he can do his own verification of what he says is Twitter’s loose method.
Lawyers say that based on Twitter’s latest correspondence, Musk believes the company is defying and flouting his information rights under the April merger agreement.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights as a result, including his right not to complete the transaction and his right to terminate the merger agreement,” the letter said. rights are involved.”
The Twitter sale agreement allows Musk to exit the deal if a “material adverse effect” is caused by the company. It defines that as a change that negatively affects the business or financial conditions of Twitter.
Last month, Musk said he had been barred from the unilateral deal, which experts said he couldn’t. If he walks away, he could be on the hook for a $1 billion breakup charge.
Musk’s latest maneuver shows how he is “finding a way out of the deal or something that will take advantage of the price renegotiated,” said Boston College law professor Brian Quinn. But Quinn said he is unlikely to stay in court because he has already forgiven his ability to ask for more due diligence.
“I doubt he will be allowed to go away,” Quinn said. “At some point, Twitter’s board will get tired of this and file a lawsuit,” a judge told a judge to force Musk to stick to the deal.
Twitter CEO Parag Agarwal has said that the company has consistently estimated that less than 5% of Twitter accounts are fake. Twitter has disclosed its bot estimates to the US Securities and Exchange Commission for years, while also warning that its estimates may be too low.
“If Twitter is confident in its publicized spam estimates, then Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently evaluate those estimates,” Musk says in the letter, adding that he does not agree to disclose or retain the data.
The bot problem is long overdue for Musk, one of Twitter’s most active celebrity users, whose name and likeness are often duplicated by fake accounts promoting cryptocurrency scams. Musk thinks such bots are a problem for most other Twitter users as well as advertisers, who take out ads based on how many real people they hope to reach.
The letter, signed by Musk’s attorney Mike Ringler, who imitated other attorneys, points to a dispute over a June 1 letter from Twitter in which the company said its information obligation was limited to the facility to close the sale. It added that Twitter is obligated to provide the data for any reasonable business purpose necessary to complete the deal.
The letter said Twitter is also to cooperate with Musk’s effort to obtain financing for the deal, which includes providing information “reasonably requested” by Musk.
The letter argues that Musk is not required to explain his reasoning for requesting the data or “introduce new terms that the company has attempted to enforce on its contractual right to the requested data.”
It alleges that Musk is entitled to data about the core of Twitter’s business model to prepare the transition to his ownership.
Matt O’Brien reported from Providence, Rhode Island.