Elon Musk feels that Twitter Inc. is breaching the merger agreement by not meeting his demand to disclose detailed information on spam and bot accounts. This is one of the other outbursts among a series of them by the billionaire and adds a twist to the takeover saga. The shares of Twitter fell about 5% in New York Monday morning.
More into the matter
Musk believes that Twitter is thwarting its right to information and resisting actively by refusing to share information as per their amended security filing on Monday. Musk had informed last month that he would not go ahead with the $44 billion buyouts unless Twitter could prove that bots or fake accounts consist of less than 5% of its total user base. Musk estimates that fake accounts make up at least 20% of all the social media giant platform users.
Twitter’s stock slump has raised doubts whether Musk will finalize his $54.20 a share deal with gaps widening between the offer price and market expectations. The Twitter shares have hardly crossed the $50 mark except briefly after Musk announced his takeover plans in April.
CEO Parag Agrawal has sparred with Elon Musk on Twitter publicly about the fake accounts. Agrawal has said that as human reviewers looking into thousands of accounts to determine fake accounts, Twitter added that he would not toss it more specifically due to privacy concerns.
Twitter did not respond to requests for comments.
In the filing on Monday by Twitter, Musk has sharply disagreed with the assessment of Twitter. The filing, which was addressed to Twitter’s legal counsel Vijaya Gadde says that Twitter’s latest offer to share additional details on the methodology used for testing bots through verbal explanations or written materials is tantamount to refusing to share data request from MR. Musk. Twitter efforts in another direction confuse and obfuscate the issues. Musk has asked for the data so that he could conduct his analysis as he does not believe in Twitter’s lax testing methods.
Musk believes that Twitter’s refusal to share more information is a breach of the merger agreement, and Musk reserves the right not to close the deal and a right to terminate the contract.
The board of Twitter says that they want to go ahead and enforce the merger saying the transaction is in the best interest of the shareholders. The proposed buyout deal includes a $1 billion breakup fee for both parties though Musk cannot walk out by just paying the charge as the merger agreement consists of a specific performance clause that allows Twitter to force Musk to close the deal.
This means that if the deal ends up in the courts, Twitter Inc. may get an order that would obligate Musk to complete the transaction rather than getting a monetary compensation order.
