What just happened?
Tesla and SpaceX CEO Elon Musk’s $44 billion purchase of Twitter is looking even shakier after he threatened to terminate the deal over a “material breach” of the company’s obligations under the agreement.
The issue relates to Twitter allegedly refusing to prove how many bots and fake accounts are on the platform.
Musk’s legal team explained that Twitter is in material breach of the merger agreement with Musk, so Musk has the right to terminate the deal. The social media giant has refused to provide critical information relating to spam and fake accounts on its platform.
Musk previously said that the number of bot accounts on the platform is far higher than what their SEC filings claim. Twitter’s SEC filings indicate that bots only make up 5% or less of their user base, while Musk has echoed claims from independent organizations that up to 20% of Twitter’s users may be bots.
On Monday, Musk’s lawyers sent a letter telling Twitter’s chief legal officer that the company “actively resists and thwarts its information rights.”
“This is a clear material breach of Twitter’s obligations under the Merger Agreement, and Mr. Musk reserves all rights arising therefrom, including his right not to consummate the Transaction and his right to terminate the Merger Agreement,” it said the writing.
Today, the richest person in the world threatened to terminate the agreement if Twitter does not provide information to him about the number of bots.
More details of this report from The Epoch Times:
“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, Twitter’s stock shares decreased by 1.5 percent this morning.
A material breach would allow Musk to drop his takeover attempt of Twitter without paying the $1 billion termination fee, though Twitter will doubtlessly argue that the issue does not constitute such a breach, and the case would likely end up in court.
In what could amount to even more trouble for Twitter, Texas attorney general Ken Paxton said he has launched an investigation into the company for “potentially false reporting over its fake bot accounts.”