Elon Musk says he can cancel Twitter deal because the company is 'actively resisting' his efforts to study fake accounts
- Musk says the breach could allow him to walk away from the $43 billion deal.
Elon Musk may be ready to walk away from his deal to buy Twitter after accusing the social network of stonewalling negotiations, according to a letter sent by his lawyers Monday.
The saga's latest kerfuffle revolves around Musk's determination to understand how much of Twitter's userbase is made up of bots, rather than actual human beings.
Unsatisfied with Twitter's own figures (the company has said bots and other false accounts make up less than 5% of its active users), the Tesla and SpaceX CEO has sought data from the social network to conduct his own analysis. He says the company has refused, accusing it of violating their original agreement, in which he waived the usual due diligence that usually accompanies such buyouts.
"Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company's corresponding obligations) under the merger agreement," the letter said. "This is a clear material breach of Twitter's obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement."
Musk said the alleged stonewalling gives him the right to walk away from the deal entirely.
In response to the letter, a Twitter spokesperson said the company remains committed to the original deal agreement.
"Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," they said. "We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms."
Twitter shares were down roughly 3.7% in early trading following the regulatory disclosure.
Twitter initially accepted Musk's offer to take it private for $43 billion in April. Then in May, Musk said the deal would be "on hold" until Twitter could prove that fake accounts made up less than 5% of its userbase. The debacle has since evolved into a public spat between Musk and Twitter leadership.
CEO Parag Agrawal said in May that Musk's method for calculating bot accounts wouldn't work, noting that such an analysis would require private information that Twitter can't share. Musk responded with a poop emoji.
Twitter's board has said it plans to enforce its end of the agreement, which includes a $1 billion breakup fee. Earlier in June, Twitter said the required waiting period for government oversight of large mergers had elapsed, eliminating on of the final hurdles to closing the deal.
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