Public Markets

Elon Musk Threatens To Terminate Twitter Acquisition

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Elon Musk has threatened to withdraw from his agreement to buy Twitter in a new letter filed with the U.S. Securities and Exchange Commission.

In the letter, Musk’s attorneys wrote that Twitter’s refusal to provide the data Musk wants to conduct his own analysis of the number of spam accounts on the platform 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.”

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Musk originally agreed to buy Twitter for around $44 billion, or $54.20 per share. Shortly before, Musk became Twitter’s largest outside shareholder and then submitted an unsolicited bid to buy the company.

Twitter deal delays and suspicion

But since the agreement, the deal has essentially been delayed because Musk wants to do his own analysis of the number of spam accounts on the platform.

Musk believes the number of fake accounts to be higher than Twitter’s own estimate. Twitter CEO Parag Agrawal said that Twitter’s estimate is based on multiple internal reviews, and that external validation isn’t an option.

“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. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base,” Musk’s attorneys wrote.

“In any event, Mr. 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,” stated the letter. “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.”

Twitter’s stock opened at $39.08 on Tuesday, significantly less than the price per share Musk agreed to pay for the company.

Illustration: Dom Guzman

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