Elon Musk has threatened to drop $ 44 billion on Twitter, complaining that social media company has failed to provide enough information about spam and fake accounts.
Musk has repeatedly criticized Twitter’s claim that less than 5% of its active users who can monetize daily are bots, warning last month that its takeover “cannot go on” unless the platform provides evidence. .
In a letter to Twitter’s chief legal officer, which was revealed in regulatory documents on Monday, Musk’s lawyers from Skadden, Arps, Slate, Meagher and Flom wrote that Tesla’s boss believes the company has “refused to provide information [he] has asked repeatedly since May 9. ”
But Twitter has insisted it will keep Musk on the original merger deal. “Twitter has and will continue to share information with Mr. Musk to complete the deal in accordance with the terms of the merger agreement,” a spokesman said. “We believe that this agreement is in the best interests of all shareholders. We intend to close the deal and implement the agreement to merge the agreed price and terms. “
Since Musk and Twitter announced the deal in April, shares of Tesla, along with emerging technology companies, have plummeted. Observers note that due to market turmoil, Musk may try to find an excuse to reduce the price of the deal or leave altogether.
Musk’s lawyers said Twitter was “actively resisting and thwarting its information rights (and related company obligations under the merger agreement” and that this “clear material breach of Twitter’s obligations” would allow Musk to “terminate the merger agreement”). “.
The letter reveals the idea that the financing of the deal by Wall Street banks could be put at risk if Twitter does not provide the information requested. “As the future owner of Twitter, Mr Musk is clearly entitled to the data requested to enable him to prepare for the transfer of Twitter’s business to his ownership and to facilitate the financing of his transactions,” Skadden wrote in his letter.
It is not easy for Musk to escape his obligation to close the transaction. Failure to fund can provide a one-off, although it will still involve paying a $ 1 billion termination fee.
Such legal withdrawal maneuvers rarely work, but Musk could seek leverage to force Twitter to reach an agreement that would allow him to pay to avoid buying the company.
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One of the best Wall Street lawyers not involved in the deal said: “It is difficult to understand how funding sources need this information, given that Twitter has managed to raise debt and equity so far. and they are definitely not entitled to do so under their letter of commitment. But it’s kind of a self-fulfilling prophecy that Elon demands that he make the banks want him, and so on. So they can really come to an agreement to make a mess of it. “
Shares of Twitter were 2% lower on Monday at $ 39.28, well below Musk’s $ 54.20 bid.
Last month, Twitter CEO Parag Agraval drew attention to concerns about Musk’s fake accounts on a long topic, insisting that the company had shared with him an “overview” of the evaluation process, but could not share personal data that would were necessary to reproduce the process externally.
In a letter Monday, Skadden said all third parties reviewing the data would abide by a non-disclosure agreement and that Musk would not retain or otherwise use “competitively sensitive information” if the deal was not concluded. “If Twitter is confident in its public spam ratings, Mr Musk does not understand the company’s reluctance to allow Mr Musk to rate those ratings independently,” the lawyers added.
Additional reports from Hannah Murphy in San Francisco
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