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Elon Musk threatens to withdraw Twitter buyout bid

June 6, 2022

Musk accused Twitter of not providing data on spam accounts, saying he reserves "his right to terminate the merger agreement" over the dispute.

: An image of Elon Musk is seen on smartphone placed on printed Twitter logos
It's the first time that Elon Musk has threatened in legal filings to withdraw from his Twitter takeover bid — rather than doing so in posts on TwitterImage: Dado Ruvic/REUTERS

Billionaire Elon Musk threatened to pull out of his multi-billion dollar bid to purchase social media giant Twitter, according to a letter sent by his lawyers on Monday.

Twitter and Musk have gone back and forth for several weeks ever since the Tesla and SpaceX CEO announced his intention to purchase the social media giant in April. 

What did the letter say?

In the letter, which was filed by Musk's lawyers to the US Securities and Exchange Commission (SEC), the billionaire said he had repeatedly asked Twitter to send data on fake accounts and spam bots on the site.

According to Musk's legal team, Twitter has so far offered to provide details about the company's testing methods on how they calculate their fake account estimates. Musk's lawyers, however, said that the offer is "tantamount to refusing Mr. Musk's data requests."

His legal team further described the lack of data as "a clear material breach" under the merger agreement between Twitter and Musk.

They added that the billionaire reserves his rights "not to consummate the transaction" as well as "his right to terminate the merger agreement."

Twitter did not immediately comment on the letter, however it previously released what it called details of Musk's takeover bid that appeared to show Musk taking no interest in this issue before launching his bid.  According to the account of Twitter's proxy statement for investors, Musk did not "seek from Twitter any non-public info regarding Twitter."

It is the first time that Musk has officially threatened to withdraw his bid to buy the company, Musk did not  instead of airing his grievances on his Twitter account.

What will Elon Musk's Twitter be like?

Why does Musk want the data?

Musk has said he wants to conduct his own analysis on the number of fake accounts on Twitter.

The social media giant has consistently estimated that fewer than 5% of the company's 229 million accounts are fake or spam bot accounts.

The company has repeatedly submitted this information to the SEC, but has also cautioned that the estimate might be low.

Musk has questioned the accuracy of these estimates, and claims that fake accounts on Twitter could be as high as 20%.

The issue of fake accounts has been a longtime fixation for Musk — who is one of the platform's top celebrity users and whose name and photos have been used by bot accounts to promote cryptocurrency scams.

What happens if Musk walks away?

Musk said last month that he was unilaterally placing the deal with Twitter on hold, despite broad financial consensus that this is not solely within his power. Twitter could seek support in the courts, trying to force Musk either to proceed or to back out. 

Should Musk walk away from the deal altogether, he could be required to pay a $1 billion breakup fee.

The Tesla billionaire made the comments days after saying he planned to let off 10% of the electric carmaker's salaried workforce because he had a "super bad feeling about the economy." 

Tesla's share prices, which ballooned from less than $100 to more than $1,000 during the COVID pandemic, briefly making Musk the world's richest man by market capitalization, have been sliding again in recent months and are back down below $700.

Musk is a self-described free speech absolutist whose posts fluctuate between whimsical and business-focused, to controversial or inflammatory statements on current events.

He's also said he would be in favor of lifting a ban on former US President Donald Trump, who was banned from the platform over his tweets related to the storming of the US Capitol in January 2021.

rs/msh (AP, Reuters, AFP)

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