Elon Musk-Twitter Deal Update: Is Deal Failing?
Elon Musk said that Twitter is breaking their merger agreement by refusing to comply with his demands for information on spam and bogus accounts, adding another twist to a takeover process characterized by the billionaire’s frequent outbursts.
According to an updated security filing on Monday, Musk claims Twitter is “actively obstructing” and “thwarting his information rights” by refusing to give the information. Last month, Musk indicated that he would not proceed with his $44 billion buyouts of Twitter unless the social media giant could demonstrate that bots account for less than 5% of its users, as stated in public filings.
According to Musk, fraudulent accounts represent at least 20% of all users. On Monday, the stock market’s decline fueled worries that Musk would complete his $54.20-per-share offer, extending the gap between market expectations and the billionaire’s price.
Since Musk announced his buyout proposal on April 14, the stock has barely – and only temporarily – crossed $50. Because Musk declined to look at Twitter’s finances beyond what was publicly accessible, the purchase came together at dizzying speed.
Parag Agrawal, the CEO of Twitter, has openly squabbled with Musk about bots on Twitter. According to Agrawal, human reviewers examine “thousands of accounts” to establish the presence of bots, who added that he couldn’t disclose further details due to privacy concerns. “Unfortunately, given the important necessity to employ public and private information,” Agrawal wrote in May, “we do not feel that this specific assessment can be completed outside.”
A request for comment from Twitter was not immediately returned. Musk vehemently disagreed with Twitter’s judgment in a Monday filing. According to the complaint, “Twitter’s current promise to simply give further details regarding the company’s own testing processes, whether through written documents or verbal explanations, is comparable to ignoring Mr. Musk’s data demands.” “Twitter’s attempt to characterize it differently is nothing more than an attempt to obscure and distort the subject.” Mr. Musk has stated that the company’s lax testing techniques are insufficient and must undertake his own investigation. The information he has asked is required to do so.”
Mr. Musk reserves all rights resulting from this, including his right not to consummate the transaction and terminate the merger agreement. In addition, he believes the company’s refusal to provide more information is a “clear material breach of Twitter’s obligations under the merger agreement.”
The board of directors of Twitter has stated that it intends to enforce the merger’s conditions, claiming that the deal is in the best interests of all shareholders. The planned takeover includes a $1 billion breakup fee for each side, but Musk won’t be able to pay the sum and walk away.
According to the original filing, the merger agreement includes a particular performance term that empowers Twitter to compel Musk to complete the transaction. As a result, if the deal goes to court, Twitter may get an order requiring Musk to finish the merger rather than monetary damages for any infractions.