By Jack Phillips
Elon Musk accused Twitter of “resisting and thwarting” his ability to obtain information about bot accounts on the social media website, saying that it’s a “breach” of the terms of their April deal.
Musk, the world’s richest person, sent a letter to the San Francisco-based firm on Monday, saying, “Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.” Several weeks ago, the Tesla CEO accused Twitter of allowing a significant number of automated or “bot” accounts on the platform and demanded the company release that data to him.
In late April, Twitter’s board and Musk jointly announced he would purchase the social media company for $44 billion and take it private. The deal could take months to finalize, and Musk has publicly stated that it’s not entirely confirmed he will actually buy Twitter.
After the letter was released on the U.S. Securities and Exchange’s website, shares for Twitter fell more than 5 percentage points as of Monday morning.
“As Twitter’s prospective owner, Mr. 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,” Musk’s letter continues. “To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base.”
And “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 letter said. “At this point, Mr. 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 Mr. Musk’s own analysis of that data will uncover.”
Last month, Musk stated that his team wanted to perform a random sampling to calculate the number of fake accounts. However, Twitter’s CEO, Parag Agrawal, later explained that nonpublic information would be required to obtain an accurate count.
But with Monday’s letter, some analysts speculated that Musk is trying to exit the deal with Twitter.
“Speaks to our thesis over past few weeks that spam/bot issue was going to be the ‘material breach’ cited by Musk to try to get out of TWTR deal,” Wedbush analyst Dan Ives wrote on Twitter. “$1 billion breakup fee; Twitter Board will fight this clearly. Help remove a major overhang on Tesla; Twitter stock be under pressure.”