Elon Musk threatens to ABANDON $44billion Twitter deal as he slams the social media giant for ‘resisting and thwarting’ his right to details on ‘spam and fake accounts’
Musk threatened to abandon the deal Monday after the social media giant allegedly refused to release details about fake accounts. He accused the firm of ‘resisting and thwarting’ his right to information about spam pages on the platform.
He also blasted its chief legal officer Vijaya Gadde in new SEC filings and said he ‘reserves all rights’ to terminate the merger agreement.
Twitter issued a statement saying it plans to ‘consummate the transaction in accordance to the terms of the merger agreement’ and will ‘continue to cooperatively share information’ with Musk.
The social media network claimed earlier in the battle it had submitted all necessary details but Musk dismissed it as comments on how they find bot accounts.
The entrepreneur has previously threatened to pull his blockbuster deal, with it being ‘temporarily put on hold’ last month while he looked into fake accounts.
He claimed spam bots could make up at least half of Twitter’s users, more than 10 times the company’s official estimate.
He also tweeted last month he ‘cannot move forward’ with the purchase until he is provided the requested data.
Elon Musk has threatened to pull out of his deal to purchase Twitter as he accuses the social media giant of ‘resisting and thwarting’ his right to information about spam and fake accounts on the platform
In a letter to Vijaya Gadde (pictured) on Monday, Musk stated if Twitter is ‘confident’ in its published spam estimates, he ‘does not understand’ the company’s reluctancy to allow him to ‘independently evaluate those estimates’
While Musk has been seemingly busy securing his Twitter deal, he has also been cozying up with his new girlfriend, Australian actress Natasha Bassett, 27. The pair are pictured enjoying a meal at the Cheval Blanc hotel in Saint-Tropez, France on May 29
In a letter to Vijaya Gadde, Twitter’s Chief Legal Officer, dated Monday, Musk’s attorney argued the terms of the billionaire’s purchase agreement requires the platform to provide the requested data, which he has allegedly repeatedly asked for since May 9.
He also disputed the company’s alleged claim that it is only required to provide information for the ‘limited purpose’ of closing the deal.
‘Musk is entitled to seek, and Twitter is obligated to provide, information and data for, inter alia, ‘any reasonable business purpose related to the consummation of the transaction,” the letter stated.
‘Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data due to concern for what Musk’s own analysis of that data will uncover.’
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.
The company, responding to Musk’s letter, said it plans to enforce the buyout at the ‘agreed upon price and terms’ and will provide the billionaire with the necessary information to secure the deal’s success.
‘We believe this agreement is in the best interest of all shareholders,’ a company spokesperson said in a statement Monday. ‘We intend to close the transaction and enforce the merger agreement at the agreed upon price and terms.’
Musk’s attorney sent a letter to Twitter’s Chief Legal Officer, Vijaya Gadde, on Monday
TIMELINE OF BILLIONAIRE ELON MUSK’S BID TO CONTROL TWITTER
January 31: Musk starts buying shares of Twitter in near-daily installments, amassing a 5% stake in the company by mid-March.
March 26: Musk, who has 80 million Twitter followers and is active on the site, said that he is giving ‘serious thought’ to building an alternative to Twitter, questioning free speech on the platform and whether Twitter is undermining democracy. He also privately reaches out to Twitter board members, including his friend and Twitter co-founder Jack Dorsey.
March 27: After privately informing them of his growing stake in the company, Musk starts conversations with Twitter’s CEO and board members about potentially joining the board. Musk also mentions taking Twitter private or starting a competitor, according to later regulatory filings.
April 4: A regulatory filing reveals that Musk has rapidly become the largest shareholder of Twitter after acquiring a 9% stake, or 73.5 million shares, worth about $3 billion.
April 5: Musk is offered a seat on Twitter’s board on the condition he amass no more than 14.9% of the company’s stock. CEO Parag Agrawal said in a tweet that ‘it became clear to us that he would bring great value to our Board.’
April 11: Twitter CEO Parag Agrawal announces Musk will not be joining the board after all.
April 14: Twitter reveals in a securities filing that Musk has offered to buy the company outright for about $44 billion.
April 15: Twitter’s board unanimously adopts a ‘poison pill’ defense in response to Musk’s proposed offer, attempting to thwart a hostile takeover.
April 21: Musk lines up $46.5 billion in financing to buy Twitter. Twitter board is under pressure to negotiate.
April 25: Musk reaches a deal to buy Twitter for $44 billion and take the company private. The outspoken billionaire has said he wanted to own and privatize Twitter because he thinks it’s not living up to its potential as a platform for free speech.
April 29: Musk sells roughly $8.5 billion worth of shares in Tesla to help fund the purchase of Twitter, according to regulatory filings.
May 5: Musk strengthens his offer to buy Twitter with commitments of more than $7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.
May 10: In a hint at how he would change Twitter, Musk says he’d reverse Twitter’s ban of former President Donald Trump following the Jan. 6, 2021 insurrection at the U.S. Capitol, calling the ban a ‘morally bad decision’ and ‘foolish in the extreme.’
May 13: Musk said that his plan to buy Twitter is ‘ temporarily on hold.’ Musk said that he needs to pinpoint the number of spam and fake accounts on the social media platform. Shares of Twitter tumble, while shares of Tesla rebound sharply.
June 6: Musk threatens to end his $44 billion agreement to buy Twitter, accusing the company of refusing to give him information about its spam bot accounts.
Last month, Musk said he wanted to pause on the purchase deal to verify false or spam accounts represented fewer than 5 percent of the company’s 229 million users during the first quarter, as Twitter reported.
If Twitter’s reporting was accurate, that would mean that there are fewer than 11.4 million fake accounts that are targeted for ads.
The billionaire said he and his team wanted to conduct their own audit of 100 Twitter followers to check how many are bots and spam accounts.
In Monday’s letter, Musk stated if Twitter is ‘confident’ in its published spam estimates, he ‘does not understand’ the company’s reluctancy to allow him to ‘independently evaluate those estimates.’
‘As Twitter’s prospective owner, Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base,’ the letter stated.
‘In any event, Musk is not required to explain his rationale for requesting the data, nor submit to the new conditions the company has attempted to impose on his contractual right to the requested data.’
The bot problem also reflects 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.
The billionaire 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.
However, some analysts speculate Musk is actually seeking the spam data in an effort to negotiate a lower price for the deal or pull out completely.
The Twitter sale agreement allows Musk to get out of the deal if there is a ‘material adverse effect’ caused by the company. It defines that as a change that negatively affects Twitter’s business or financial conditions.
Financial experts claim Musk can’t unilaterally place the deal on hold, although that hasn’t stopped him from acting as though he can.
If he walks away from the merger agreement, Musk could be on the hook for a $1 billion breakup fee.
Though Twitter’s board agreed to the purchase in April, it still has not been approved by shareholders, and is not expected to close for at least several months.
In fact, late last month, a proposed class-action suit was filed against Musk and Twitter over the Tesla CEO’s acquisition of the platform. The suit alleges Musk violated multiple California corporate laws and engaged in stock market manipulation.
The suit claims Musk benefited financially by delaying to disclose his stake in the platform and by ‘temporarily concealing’ his initial plan to become a board member. Musk ultimately declined the offered board seat.
The complaint, which was obtained by CNBC, also states Musk bought Twitter shares while knowing insider information about the company based on private conversations with board members and executives.
Musk revealed his stake in Twitter on April 4 and 10 days later proposed his $44 billion buyout. He has sold a significant chunk of his Tesla shares in an effort to secure funding for the deal.
Since his acquisition bid, both Tesla and Twitter stock prices have been on the decline. In wake of Monday’s letter, Twitter saw more than 4 percent drop, to $38.42 per share, during morning trading.
In wake of Monday’s letter, Twitter saw more than 4 percent drop, to $38.42 per share, during morning trading
However, Tesla stock jumped 2.98 percent to $725.72 per share on Monday after it was revealed Musk might walk away from the agreement to buy Twitter
Tesla stock been trailing downwards since the Twitter board approved Musk’s acquisition bid, which analysts alleged was a reflection of investor concerns about his pending deal. If the buyout pulls through, Musk would be in charge of Tesla, Twitter and SpaceX.
However, Tesla stock jumped 2.98 percent to $725.72 per share on Monday after it was revealed Musk might walk away from his Twitter purchase agreement.
To complete the takeover, Musk originally committed to borrowing $12.5 billion with Tesla stock as collateral to buy Twitter. He also would borrow $13 billion from banks and put up $21 billion in Tesla equity.
Though Musk is the richest man in the world, with an estimated net worth of $246 billion, most of his fortune is tied up in stock.
In April, he sold off a total of $8.5 billion in Tesla shares in order to fund his cash commitment for the deal. After the sale Musk still owned about 16 percent of Tesla, a stake worth about $119 billion at current prices.
The bot problem also reflects a longtime fixation for Musk. In April he promised to ‘defeat the spam bots or die trying’
In May, he strengthened the equity stake in his offer for Twitter with commitments of more than $7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.
Money from the investors cuts the amount borrowed against the value of Tesla stock to $6.25 billion.
While Musk has been seemingly busy securing his Twitter deal, he has also been cozying up with his new girlfriend, Australian actress Natasha Bassett, 27.
Last week the pair were seen enjoying a meal at the Cheval Blanc hotel in Saint-Tropez, France, where rooms cost upwards of $1,300-a-night.
They sipped on rose, ate French fries and chatted animatedly while waiters fluttered by. The pair then strolled hand-in-hand out of the expensive eatery past other sun-seekers on the beach.
Bassett, Musk’s youngest girlfriend yet, and the billionaire are believed to have started dating in February. The couple is pictured walking along a beach in Saint-Tropez
Bassett is pictured in an Instagram post she uploaded last week from one of the hotel’s balconies
The billionaire also confirmed last month that he will switch political allegiances and vote for the Republican party in the next election, after casting his ballot ‘overwhelmingly’ for the Democrat party in the past.
The entrepreneur, who was born in South African and holds US citizenship, is registered as an independent voter and describes himself as a moderate.
However, in recent years – and particularly while publicly discussing his Twitter takeover – Musk has demonstrated he is leaning more towards the political right.
He is also in an apparent feud with President Joe Biden who on Friday dismissed Musk’s recent statement that he had a ‘super bad feeling’ about the U.S. economy.
When probed about the billionaire’s remark during a press conference, Biden scoffed: ‘Lots of luck on his trip to the moon.’
Biden then argued he saw encouraging signs for the U.S. economy.
‘Well let me tell you, while Elon is talking about that Ford is increasing their investment overwhelmingly,’ Biden stated. ‘I think Ford is increasing in building new electric vehicles, 6,000 new employees – union employees, I might add, in the Midwest.’
Speaking via video link at a tech summit in Miami in May, Musk confirmed he would be changing his vote from Democrat to Republican
‘The former Chrysler Corporation, Stellantis, they are also making similar investments in electric vehicles,’ Biden continued. ‘Intel was adding 20,000 new jobs for making computer chips.’
Musk tweeted moments later, ‘Thanks Mr President!’ and shared a NASA press release announcing SpaceX had won the contract to take American astronauts back to the moon.
Musk and Biden’s feud started more than a year ago after Biden backed auto unions and unionization as a whole, DealBook reported.
The President also issued support for a bill that benefits unionized electric-car makers ‘at the expense of those that are not,’ such as Tesla.
Biden also routinely touts the hiring efforts of Ford, but has failed to point out that Tesla hired 50,000 workers globally over the last two years.
Analysts argue that overall Musk and Biden share similar policy objectives, especially in regard to technological innovation and green energy. Some allege without the support of ‘powerful’ and ‘unpredictable’ Musk, Biden may struggle with furthering his agenda policy for the highly-battled topics.
Musk tweeted moments later, ‘Thanks Mr President!’ and shared a NASA press release announcing SpaceX had won the contract to take American astronauts back to the moon