Billionaire Elon Musk threatened to pull out of his $44 billion deal to buy Twitter unless the social media company provided him with information about how it calculated the number of fake accounts on its platform.
In a letter today (6 June) to Twitter, and in an amended filing with the Securities and Exchange Commission, law firm Skadden, Arps, Slate, Meagher & Flom stated Twitter was breaching the merger agreement by not providing the information Musk had previously requested.
“Based on Twitter’s behaviour to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” read the letter.
The lack of action by Twitter was a “clear material breach of Twitter’s obligations under the merger agreement”, and Musk therefore has the right to terminate the merger agreement.
In a filing related to its first quarter earnings in May, Twitter executives estimated false, or spam, accounts represented fewer than 5 per cent of its active users.
Musk stated the same month the deal to buy Twitter was on hold until he had his own proof that bots make up just 5 per cent of the company’s users.
“Twitter’s latest offer to simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk’s data requests,” the letter added. “Twitter’s effort to characterise it otherwise is merely an attempt to obfuscate and confuse the issue.”
Musk announced his takeover bid of Twitter in April.
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