Elon Musk is now threatening to cancel his $44 billion buyout offer of Twitter and has accused the company of concealing details about the real number of spam and bot accounts on the platform.
In a letter to the U.S. SEC, Musk’s lawyers said Twitter has refused to hand over its user data, which prevents Musk from vetting the company’s user base. Twitter has always maintained that about 5% of its platform users are bots. However, after Musk and the company reached a buyout agreement in April, the SpaceX and Tesla CEO repeatedly brought attention to the number of bots on Twitter and asked for data so he could do his own verification.
Musk’s lawyers say Twitter refuses to share data
In the letter to the SEC, lawyers representing Musk wrote, “Mr. Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so.”
The letter also mentions that Twitter has “refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022.” According to Musk’s lawyers, Twitter has offered to give an explanation about its testing methodology to Musk, and this is “tantamount to refusing” his request.
The letter further explains that if Twitter doesn’t hand over data, Musk will walk out of the deal due to a “material breach” of the agreement. The letter continues to explain, “Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement.”
Lawyers claim Musk is ready to walk away
Susannah Steeter, senior investment and markets analyst at Hargreaves Lansdown, said in a research note that the letter from Elon Musk’s legal team is “the strongest signal yet that the Tesla founder is prepared to walk away from the $44 billion deal. The takeover was always destined to be a bumpy ride, and this is a deep pothole to navigate for both sides.”
As a result, Twitter shares were down by about 3% on June 6 before regaining some ground. Streeter noted that the fact that Twitter’s shares didn’t lose more value is an indication that investors’ perhaps had their doubts about Musk’s buyout plan right from the start.
Musk is, at present, also dealing with a lawsuit filed by Twitter shareholders who are suing him for deliberately driving down the price of the company’s shares.