Musk threatens to drop Twitter deal unless it shares fake user data
ELON MUSK has threatened to call off his $44bn (£35bn) takeover of Twitter if the social network refuses to hand over data on how many fake accounts it has.
The Tesla billionaire told the company that it is “actively resisting and thwarting his information rights” and that he reserves the right to cancel the deal, in a letter yesterday.
Separately last night, Texas Attorney General Ken Paxton launched an investigation into Twitter for “potentially false reporting over its fake bot accounts”. The social media giant has until June 27 to respond.
Earlier in the day Twitter shares fell as much as 5.6pc to $37.92 in New York as Mr Musk’s move cast renewed doubt over his intention to complete the deal.
The stock recovered later to trade less than 2pc down, but was still well below Mr Musk’s $54.20 offer price, despite the company claiming it remained committed to the deal.
Yesterday Twitter published a letter to its chief lawyer Vijaya Gadde from Mr Musk’s legal representatives, detailing a series of exchanges between them since late May.
Mr Musk claimed that Twitter had “refused to provide the information that Mr Musk has repeatedly requested ... to facilitate his evaluation of spam and fake accounts on the company’s platform”, and that “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”. It said that instead of delivering raw data on Twitter’s users, the company had merely provided details of how it tests for fake accounts.
Twitter has said that under 5pc of its 229m daily users are fake or spam accounts, a figure that Mr Musk disputes.
Mr Musk said he had a “contractual right” to the data, which he needed to secure the debt financing needed for the deal.
The letter added: “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. “This is a clear material breach of Twitter’s obligations under the merger agreement and Mr Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”
Twitter insisted it planned to complete the deal as agreed. “Twitter has and will continue to co-operatively share information with Mr Musk to consummate the transaction in accordance with the terms of the merger agreement,” it said.
“We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
Mr Musk’s questioning of Twitter’s user numbers have been widely interpreted as a negotiating tactic to drive down the takeover price and last month he said a lower offer was “not out of the question”.
His letter yesterday is the strongest sign yet that he could back out of the deal amid growing frustrations between both sides.
Last month, Mr Musk hinted that US regulators should investigate Twitter over how it disclosed fake user accounts, responding to a tweet that suggested undercounting such accounts would amount to fraud by saying “absolutely”.