threatened to end his deal to buy
Twitter a company
In a letter he accused the company of not complying with his request for data on the number of fake and spam accounts on the social media platform.
Mr. Musk said Twitter refused to provide him with the data needed to facilitate his own assessment of the number of Spam and fake accounts. In April, Twitter accepted Mr. Musk’s offer 44 billion dollars offer To take over the company and switch to the private sector.
in e-mail Mr Musk’s attorney, Mike Ringler, told Twitter’s chief legal officer Vijaya Gadde that was disclosed in a regulatory filing on Monday that Mr Musk is entitled to the requested data, in part so he can facilitate the financing of the deal.
“This is a material breach of Twitter’s obligations under the merger agreement and Mr. Musk retains all rights arising therefrom, including his right not to complete the transaction and his right to terminate the merger agreement,” Mr Ringler wrote.
A Twitter spokesperson said that the company “will continue to cooperate in sharing information with Mr. Musk to complete the transaction in accordance with the terms of the merger agreement.” “We intend to close the deal and enforce the merger agreement at the agreed price and terms,” he added.
Twitter shares fell about 1.5% to $39.57 on Monday. All-cash deal at $54.20 per share.
Also on Monday, Texas Attorney General Ken Paxton launched an investigation into Twitter, saying the company may have misreported fake bot accounts in violation of the Texas Deceptive Business Practices Act. Paxton’s office has directed Twitter to produce documents on how its user data is calculated and managed and how that information relates to his advertising business. Paxton’s office said Twitter had until June 27 to respond to his demands.
“Texas relies on Twitter’s public statements that nearly all of its users are real people,” said Republican Mr. Paxton. “It matters not only to regular Twitter users, but also the Texas businesses and advertisers who use Twitter for a living.”
Mr. Musk last year Headquarters transfer for his car company,
Tesla a company ,
to Texas from California. The rocket company he runs, Space Exploration Technologies Corp., has large operations in Texas, too.
Mr. Paxton and Twitter have clashed in the past. Last month, a federal appeals court ruled on the current state of Texas can enforce the law Preventing the largest social media platforms on the Internet, including Twitter, from suppressing users’ content based on the point of view of their speech. Mr. Paxton’s response to the verdict with a tweet He said he supported the law and that the Fifth Circuit “made the right call here.”
Mr. Musk’s latest speech is his clearest statement that he may try to abandon the deal, which could lead to what could be a protracted legal battle between the two sides. As part of the deal, the two parties agreed to pay each other $1 billion in breakup fees if they caused the deal to not take place for certain reasons. Twitter could also file a lawsuit to force Mr. Musk to move forward with the deal.
There are only specific scenarios under which Mr. Musk could simply pay a termination fee to walk away from the deal, including if regulators try to block the deal or debt financing fails.
For years, Twitter has publicly released its own estimate of the number of daily active users that are fake or spam accounts, putting the percentage at less than 5% of monetized daily active users. Mr. Musk The number has been registered At least four times as much as 20% of Twitter accounts.
In his letter on Monday, Ringler confirmed that Musk had received a response from Twitter on June 1, but said he had not satisfied Musk’s requests. “If Twitter is confident in its reported estimates of spam, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently assess these estimates,” the letter read.
As part of the deal Mr. Musk Has waived detailed due diligence Usually performed by buyers on the targets. in Reply to Tweet On Monday, Mr. Musk suggested that the due diligence waiver does not apply to any potential misrepresentations by Twitter.
Legal experts have offered various theories about what might lead Mr. Musk and his legal team.
“It sounds like they’re trying to get their due diligence done in an agreement that doesn’t have one,” said David Hoppe, a mergers and acquisitions, technology and media attorney at Gamma Law in San Francisco.
Mr. Musk will need to argue that something that has happened since the time he signed the deal has raised new doubts about the estimates made by Twitter about the amount of spam and fake accounts on its platform, he said.
“I’m sure Musk’s legal team wishes there was a change of circumstances that would raise doubts about the legality of these numbers, but nothing has really changed,” said Mr. Hobby. “There is no bomb.”
By tying the fake account issue to Mr. Musk’s ability to secure funding for the deal, his legal team might signal an exit exit they might try to pursue to extract their clients from the transaction, said Ben Means, a professor at the university. From South Carolina School of Law. “Obviously funding is needed to close the deal,” he said.
Eric Talley, a professor at Columbia Law School, said that while Mr. Musk has the right to request information, Twitter may not be able to share it if doing so would infringe someone else’s legal rights or undermine the company’s competitive position.
Musk offered to buy Twitter for $44 billion in April, and the company agreed to the deal that same month. In May, Tesla’s CEO said the deal was “temporarily on hold” due to his concerns about the company’s accountability for Number of fake accounts on its platform.
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