Despite the fact that his Twitter deal just cleared a major hurdle in making it past the timeline required for the DOJ and FTC to look into antitrust concerns, Musk’s Twitter takeover could be off due to what he has described as “material breach” in Twitter’s disclosures regarding bots.
According to ABC News, one of the earliest to report on the potential end of the deal, Elon is threatening that he will walk away from the massive, $44 billion deal because of what he perceives as Twitter’s refusal to give him truthful information about how many accounts on the platform are real and how many are bot accounts.
That threat, again according to ABC, came in a letter that SpaceX and Tesla lawyers sent to Twitter on Monday, a letter filed with the SEC by Twitter. The outlet, reporting on the letter and bot accusation, reports that:
The letter says Musk has repeatedly asked for the information since May 9, about a month after his offer to buy the company, so he could evaluate how many of the company’s 229 million accounts are fake.
Rumors have swirled, despite Musk’s assurances that he was “still committed to acquisition”, since it came out that the deal was on hold pending Twitter’s proof that five percent or fewer of its accounts are fake, bot accounts. Elon, who believes the percentage is far higher, paused the deal as he worked to verify the percentage number given by Twitter.
That apparently didn’t happen, or at least Twitter was unhelpful enough in dealing with his verification attempts that its actions constituted “material breach,” as the letter claims, so now the deal could be off.
The letter, describing that breach, says:
“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’s lawyers also, in the letter, said:
As Twitter’s prospective owner, Mr. Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base. In any event, Mr. Musk is not required to explain his rationale for requesting the data, nor submit to the new conditions the company has attempted to impose on his contractual right to the requested data. At this point, Mr. Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data due to concern for what Mr. Musk’s own analysis of that data will uncover.
If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently evaluate those estimates. As noted in our previous correspondence, Mr. Musk will of course comply with the restrictions provided under Section 6.4, including by ensuring that anyone reviewing the data is bound by a non-disclosure agreement, and Mr. Musk will not retain or otherwise use any competitively sensitive information if the transaction is not consummated.
Current Twitter CEO Parag Agrawal has defended the company’s bot estimate in the past, particularly in a long Twitter thread to which Musk replied with a poop emoji, though Twitter has not disclosed how exactly it counts those bots, something that has frustrated Mr. Musk.
This story syndicated with permission from Will, Author at Trending Politics
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