Musk threatens to nix bid for Twitter

Company accused of withholding info about spam bots.

Elon Musk is threatening to walk away from his $44 billion bid to buy Twitter, accusing the company of refusing to give him information about its spam bot accounts.

Lawye rs for the Tesla and Spacex CEO made the threat in a letter to Twitter dated Monday. That letter was included in a filing from Twitter with the U.S. Securities and Exchange Commission.

The letter says Musk has repeatedly asked for the information since May 9, about a month after his offer to buy the company, so he could evaluate how many of the company’s 229 million accounts are fake.

Shares of Twitter Inc. slid more than 3% Monday, likely incensing Twitter shareholders who filed a suit against Musk late last month for deflating the price of the stock. Shares of Twitterare down 23% in the last month.

A message was left early Monday seeking comment from Twitter.

The lawyers say in the let- ter that Twitter has offered only to provide details about the company’s methods for determining the number of accounts. But they con- tend that’s “tantamount to refusing Mr. Musk’s data requests.” Musk wants underlying data so he can do his own verification of what he says are Twitter’s lax methodologies.

The lawyers say that based on Twitter’s latest correspon- dence, Musk believes the company is resisting and thwarting his information rights under the April merger agreement.

“This is a clear material breach of Twitter’s obliga- tions under the merger agree- ment and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” the letter says.

The Twitter sale agree- ment allows Musk to get out of the deal if there is a “mate- rial adverse effect” caused by the company. It defines that as a change that nega- tively affects Twitter’s busi- ness or financial conditions.

Last month Musk said he was unilaterally placing the deal on hold, which experts said he can’t do. If he walks away, he could be on the hook for a $1billion breakup fee.

Musk’s latest maneuver shows how he is “looking for a way out of the deal or something that will get leveragefora renegotiation of the price,” said Brian Quinn, a law professor at Boston College. But Quinn said it’s unlikely to hold up in court since he already waived his ability to ask for more due diligence. “I doubt he would be allowed to walk away,” Quinnsaid. “At some point, the board of Twitter will tire of this and file a suit” asking a judge to force Musk to stick to the deal.

Twitter CEO Parag Agrawal has said the company has consistently estimated that fewer than 5% of Twitter accounts are fake. Twitter has disclosed its bot estimates to the U.S. Securities and Exchange Commission for years, while also cautioning that its estimate might be too low.

“If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently evaluate those estimates,” the Musk letter says, adding that he agrees not to disclose or keep the data.

The bot problem is a longtime fixation for Musk, one of Twitter’s most active celebrity users, whose name and likeness are often mimicked by fake accounts promoting cryptocurrency scams. Musk appears to think such bots are also a problem for most other Twitter users, as well as advertisers who take out ads on the platform based on how many real people they expect to reach.

The letter signed by Musk attorney Mike Ringler that copied other lawyers points to a spat over a June 1 letter from Twitter in which the company said its information obligations are limited to facilitating the closing of the sale. It says Twitter is obligated to provide data for any reasonable business purpose needed to complete the deal.