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Elon Musk has threatened to back out of the $44 billion deal to purchase Twitter if the social media network fails to disclose data on bot and spam accounts that he has requested.
In a letter filed with the Security and Exchange Commission, Musk’s lawyer Mike Ringler accused Twitter of “resisting and thwarting his information rights” under the agreement to buy the platform.
Ringler wrote, “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.”
Despite repeated attempts, Musk’s team said that Twitter has declined to expound on its claim of the platform’s fake profile composition only being 5%, which Musk believes is far too low to be accurate.
Musk’s team claims that the accuracy of this data is essential in gaining funding for Elon’s Twitter bid. According to NY Times, Morgan Stanley and other lenders have agreed to lend Mr. Musk $13 billion to help fund his takeover.
Read here: Elon Musk puts Twitter deal on hold due to fake accounts (commsroom.co)
Standing up by the company’s long-standing spam metric, Twitter CEO Parag Agrawal last month said that internal estimates of bot accounts on the platform over the previous four quarters were “well under 5%.”
Agrawal claimed that the number had remained the same since 2013, although he emphasized the difficulty of distinguishing actual people from bots and accounts used in spam campaigns.
“Some of the spam accounts which are actually the most dangerous – and cause the most harm to our users – can look totally legitimate on the surface,” Agrawal added.
Agrawal also said that Twitter could not reproduce the estimate externally, given the need to use public and private information to determine whether an account is a spam.
“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,” the platform said in a statement.
Read also: Twitter shareholders sue Elon Musk for trying to drive down deal price (commsroom.co)
Meanwhile, experts speculate that the pushback could be a case of buyer’s remorse and an attempt to coerce Twitter into lowering its $44 billion purchase price.
Dennis Dick, a proprietary trader at Bright Trading LLC, told Reuters that it’s pretty evident that he has buyer’s remorse, and he’s doing everything he can to obtain a price drop.
“You can see the selloff in social media stocks and he has realised that he overpaid … all these are tactics just to get a reduction in price,” Dick added.
According to AP and Reuters, if Musk backs out of the arrangement, he might be liable for a $1 billion breakup fee.
Even before these developments, Twitter shares considerably fell below Musk’s $54.20 per share acquisition offer, signaling investor uncertainty about the deal’s success.
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
