Elon Musk threatens to end Twitter deal without spam accounts information

Elon Musk threatens to pull $44 billion from the Twitter acquisition if the company doesn’t provide more information about how the number of fake accounts is calculated.

In a letter delivered to Twitter on Monday and filed with the Securities and Exchange Commission, Mr. Musk’s lawyers at the law firm Skadden, Arps, Slate and Meagher & Flom argued that Twitter was “actively resisting and frustrating” Mr. Musk’s rights under the terms of his deal to acquire the social media company. His lawyers accused Twitter of committing a “clear material breach” of its obligations, and said Mr. Musk had the right to terminate the agreement as a result.

message said mr. Musk has “repeatedly” requested more information about how Twitter measures spam and fake accounts on its platform, and that he “has made it clear that he does not believe the company’s lax testing methodologies are sufficient so he should conduct his own analysis.” He said Twitter’s cooperation is necessary to secure the debt financing that the banks committed to fund the deal.

Twitter’s response to previous inquiries from Mr. Musk’s team, explaining the company’s testing methodology, was a rejection of the master. “Mask is requesting his data,” the message said.

the master. Musk, who signed a deal to acquire Twitter in April, has threatened in recent weeks to put the deal on hold due to its number of fake accounts. Last month, he wrote on Twitter that “deal cannot go ahead” until Twitter shows “evidence” that bots make up less than 5 percent of its users. He made similar statements at a conference in Miami, indicating that he might try to pave the way for a renegotiation of the deal.

In doing so, said Mr. Musk appears to be laying the groundwork for the argument that Twitter has a “material negative change” or change that would significantly affect its business, potentially allowing him to break the deal. Lawyers have questioned the merits of this argument, particularly since Twitter has long revealed that fake accounts account for about 5 percent of its users. the master. Musk’s message on Monday represents a new strategy.

“What it’s actually doing is trying a much smarter way out of the merger agreement,” said Ann Lipton, professor of corporate governance at Tulane College of Law. “If Twitter is really blocking information requests, and those information requests are necessary or reasonable in order for Musk to get his funding — which he claims in this letter — that would likely be a breach that allows Musk to get away with it.”

Twitter, in turn, could argue that it does not possess the information that Mr. She said Musk is demanding, or it is not necessary to end the deal.

The deal is expected to close by October. 24. If it hasn’t closed by then, either side can turn away.

If the transaction is still pending regulatory approval at that time, Mr. Musk and Twitter will have another six months to shut down.

Twitter’s stock fell 4 percent in early trading Monday, to about $38.50 a share, well below the $54.20 price set in the deal agreed with Mr. musk.

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