In a new SEC filing this morning, Twitter shared a letter it received from Elon Musk’s legal team expressing dissatisfaction with the company’s information on the level of “spam and fake accounts. “at your service. This is the same concern that the tech entrepreneur has been widely circulating since his agreement to buy the social media platform was resolved earlier this year.
According to the letter, which you can read in full here, Musk believes that Twitter’s latest offer only provides additional details about the company’s own test methodologies, either through written materials or verbal explanations. [as] is tantamount to refusing [his] data requests “, requests that the CEO of SpaceX and Tesla says will help” facilitate your assessment of spam and fake accounts on the company’s platform. “
The letter says that more data (and not just an explanation of how existing data was collected) about non-human Twitter users, both natural and spam, is important to help close the transaction from a financing. “As a potential Twitter owner, Mr. Musk is clearly entitled to the data requested to enable him to prepare for the transition of the Twitter business to his ownership and to facilitate the financing of his transaction.” , says the letter.
At the end of the brief correspondence, Musk’s legal team threatens to end the deal (emphasis: TechCrunch):
Based on Twitter’s behavior so far, and the latest correspondence from the particular company, Mr. Musk believes the company is actively resisting and frustrating its rights to information (and the corresponding obligations of the company) under the merger agreement. This is a clear material breach of Twitter’s obligations under the Merger Agreement and Mr. Musk reserves all rights arising from it, including its right not to complete the transaction and its right to terminate the Merger Agreement.
Words of true struggle.
Following Musk’s various moves to influence the social network at first, and then to buy it in bulk, the controversial poster has made several claims about how Twitter has non-human users. Musk even tweeted excrement-themed emojis to Twitter CEO at social service after Parag Agrawal wrote a thread about how the company handles spam and bots.
The pace at which Musk went from charging to forcing Twitter to accept his offer, valuing the company at $ 54.20 per share, to attacking the company, its leadership and data on non-human users was fast and, many speculated, indicative of their desire not to complete the deal at the agreed price. Since the deal was forced into existence, the value of technology stocks has dropped dramatically, making the transaction seem more expensive as time goes on.
We now have a clear threat from Musk’s team that he can walk away if he doesn’t get more information. If Musk’s demands are in good faith, we leave it to you. But the situation poses an interesting enigma. If Twitter wants to force Musk to pay the agreed price, it can grant and share more data. But if so, what prevents Musk from posting on Twitter about the information disclosed? Your letter states that “of course, you will comply with the restrictions set forth in section 6.4, including ensuring that anyone reviewing the data is subject to a non-disclosure agreement,” but does anyone take that statement seriously?
Fortunately, if Twitter doesn’t want to sell to Musk (remember that the company originally enacted a poison pill defense to defend itself from its proposals), it simply can’t share more information, allowing its potential acquirer to try to get out of the agreement.
Investors are betting that the latter case is more likely, selling shares of Twitter this morning, lowering the value of the company’s shares by 5.6% as markets prepare for opening.