Lack of info breaches $44B deal, Musk says
Elon Musk said he believes Twitter Inc. is breaching their merger agreement by not meeting his demands for information about spam and fake accounts, injecting another twist into a takeover saga marked by the billionaire's outbursts.
The shares fell 1.49 per cent to US$39.56 at the close Monday in New York. Musk believes Twitter is “actively resisting” and “thwarting his information rights” by refusing to disclose the information, according to an amended securities filing on Monday.
Last month, Musk said he wouldn't proceed with his Us$44-billion takeover of Twitter unless the social media giant can prove bots make up fewer than five per cent of its users, as the company has stated in public filings.
Musk has estimated that fake accounts make up at least 20 per cent of all users.
Monday's stock slump reinforced doubts that Musk would finalize his Us$54.20-a-share offer, further widening the gap between the market's expectations and the billionaire's price. The shares have barely — and only briefly — surpassed US$50 since Musk sprung his buyout plan on April 14.
Twitter CEO Parag Agrawal has sparred with Musk on Twitter about bots. Agrawal has said the company has human reviewers look at “thousands of accounts” to determine the prevalence of bots, but added that he couldn't share more specifics because of privacy concerns. “Unfortunately, we don't believe that this specific estimation can be performed externally, given the critical need to use both public and private information,” Agrawal wrote in May.
In a statement, Twitter said it “has and will continue to cooperatively share information” with Musk. The company said it believes the deal is in the best interest of all shareholders and intends to “close the transaction and enforce the merger agreement at the agreed price and terms.”
In the filing Monday, Musk disagreed with Twitter's assessment. “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,” according to the filing, which was addressed to Twitter's legal counsel, Vijaya Gadde. “Mr. Musk has made it clear that he does not believe the company's lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so.”