Musk’s plan to buy Twitter has worried policymakers around the world.
Joe Skipper | R
Less than three months after agreeing to buy Twitter for $44 billion, Elon Musk says he wants out. It’s no surprise — Musk expressed the buyer’s remorse shortly after the deal was announced.
Musk’s lawyers on Friday sent Vijaya Gadde, Twitter’s chief legal officer, a letter explaining why the Tesla CEO and richest person in the world has no plans to proceed with the merger agreement.
The lawyers echoed the arguments made by Musk, claiming that Twitter downplays the number of bots and spam accounts on the platform. Just weeks after Twitter accepted the unsolicited offer in late April, Musk began publicly raising doubts about the company’s number of fake and spam accounts.
“In short, Twitter has not provided any information requested by Mr. Musk for nearly two months, despite his repeated, detailed clarifications aimed at simplifying Twitter’s identification, collection, and disclosure of the most relevant information contained in Mr. Musk’s original.” Inquiries were sought,” the lawyers wrote on Friday.
They added that inaccurate information provided by Twitter in SEC disclosures “could provide additional basis for terminating the merger agreement.”
Back in May, Musk said in a tweet”Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts actually represent less than 5% of users.”
Meanwhile, the company’s shares plummeted as investors feared the deal would fall through. A day before Musk said the deal was on hold, Twitter’s market cap fell to $9 billion below Musk’s roughly $44 billion purchase price. It didn’t help that the broader market tumbled, led by a collapse in tech stocks.
Twitter shares fell another 5% to $35.04 after the close on Friday after falling more than 5% in regular trading. They’re now 35% below the $54.20 price Musk was willing to pay.
Twitter isn’t ready to let Musk go. Bret Taylor, the company’s chief executive officer, said Friday that Twitter would be pursuing the case in court.
“Twitter’s board of directors is committed to completing the transaction at the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement,” Taylor wrote in a tweet. “We are confident that we will prevail in the Delaware Court of Chancery.”
Some analysts viewed Musk’s public statements about Twitter spam accounts as a convenient way to take a hit on the company’s value.
Bernstein’s Toni Sacconaghi said on CNBC’s “Squawk Box” that he believes Musk is launching a “negotiating tactic” in hopes that Twitter will eventually lower its selling price.
“The market has collapsed,” Sacconaghi said at the time. “He’s probably using the disguise of real active users as a negotiation ploy.”
Musk went on to draw attention to what he believes to be the biggest issue of spam account undercounting, indicating he viewed the issue as an impediment to completing the acquisition.
In mid-May, he again expressed his doubts about Twitter’s accounting for spam accounts to his more than 100 million Twitter followers. He claimed at the time that Twitter CEO Parag Agrawal “refused to provide evidence” that less than 5% of the accounts were fake or spam accounts.
“Yesterday the CEO of Twitter publicly refused to provide <5% proof," Musk tweeted. "This deal can't move forward until he does."
In June, Musk again made public statements about the proliferation of fake and spam accounts on Twitter, telling a Bloomberg event, “We are still waiting for a resolution on this matter and it is a very important matter.”
Earlier this week, The Washington Post reported that Musk and his associates were unable to check Twitter’s spam statistics and that the deal was in jeopardy, causing Twitter shares to fall 4%.
It’s a very different tone from Musk when he was aggressively pursuing a deal earlier this year. In April, he sent a letter to Taylor expressing his belief that the company “needs to be transformed into a private company” and that the messaging platform has the potential to become “the platform for free speech around the world.” be”.
“Twitter has tremendous potential,” Musk said at the time. “I’ll unlock it.”
CLOCK: He probably realized that owning Twitter wasn’t going to be much fun