Musk’s plan to buy Twitter has worried policymakers around the world.
Joe Skipper | Reuters
Less than three months after agreeing to buy Twitter for $ 44 billion, Elon Musk says he wants to leave. Not surprisingly, Musk has been expressing buyer remorse since shortly after announcing the deal.
Lawyers representing Musk on Friday sent a letter to Vijaya Gadde, Twitter’s legal director, explaining why Tesla’s CEO and the world’s richest person have no plans to continue the merger deal.
Reiterating the arguments Musk has made, the lawyers claimed that Twitter minimizes the number of bots and spam accounts on the platform. A few weeks after Twitter accepted the unsolicited offer in late April, Musk began publicly expressing doubts about the company’s fake and spam count.
“In short, Twitter has not provided the information Mr. Musk has requested for nearly two months, despite his repeated and detailed clarifications aimed at simplifying Twitter’s identification, compilation, and disclosure of the most relevant information sought. in Mr. Musk’s original applications. ” the lawyers wrote Friday.
They added that inaccurate information provided by Twitter to SEC revelations “may provide an additional basis for terminating the merger agreement.”
In May, Musk said in a tweet, “The Twitter deal is temporarily suspended pending details that support the calculation that spam / fake accounts actually account for less than 5% of users.”
Meanwhile, the company’s shares were plummeting due to investor concern that the deal is falling apart. A day before Musk said the deal was pending, Twitter’s market capitalization fell $ 9 billion below Musk’s purchase price of approximately $ 44 billion. It did not help the broad market to fall, led by a collapse of technological stocks.
Shares of Twitter fell another 5% after Friday hours to $ 35.04 after falling more than 5% in regular trading. They are now 35% below the $ 54.20 price Musk agreed to pay.
Twitter isn’t ready to let Musk go. Bret Taylor, president of the company, said Friday that Twitter will take the case to court.
“The Twitter Board agrees to close the transaction according to the price and terms agreed with Mr. Musk and plans to initiate legal action to enforce the merger agreement,” Taylor wrote in a tweet. “We are confident that we will prevail in the Delaware Chancellery Court.”
Some analysts saw Musk’s public statements about Twitter’s spam accounts as a convenient way to bail himself out as the company’s value plummeted.
Bernstein’s Toni Sacconaghi told CNBC’s “Squawk Box” that he believed Musk was instigating a “negotiation tactic,” in the hope that Twitter would eventually reduce its selling price.
“The market has gone down a lot,” Sacconaghi said at the time. “He’s probably using the disguise of real active users as a bargaining ploy.”
Musk continued to draw attention to what he said was the main problem with sub-counting spam accounts, indicating that he saw the problem as an obstacle to completing the acquisition.
In mid-May, he again expressed to his audience of more than 100 million Twitter followers his doubts about Twitter’s accounting of spam accounts. He then alleged that Twitter CEO Parag Agrawal “refused to show evidence” that only less than 5% of accounts are fake or spam accounts.
“Yesterday, the CEO of Twitter publicly refused to show a test of <5%," Musk tweeted. "This agreement cannot move forward until it does."
In June, Musk again publicly commented on the prevalence of fake and spam accounts on Twitter, saying at a Bloomberg event that “We’re still waiting for a resolution on this issue, and that’s a very important issue.”
Earlier this week, The Washington Post reported that Musk and his associates were unable to verify Twitter spam statistics and that the deal was in jeopardy, causing Twitter shares to fall 4%.
It’s a very different tone from what Musk took when he aggressively sought an agreement earlier this year. In April, he sent a letter to Taylor expressing his belief that the business “needs to be transformed as a private enterprise” and that the messaging platform has the potential to “be the platform for freedom of expression in all the world”.
“Twitter has extraordinary potential,” Musk said at the time. “I’ll unlock it.”
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