June 6 (Reuters) – Elon Musk warned on Monday that he could turn down his $ 44 billion bid to acquire Twitter Inc. (TWTR.N) if the social media network fails to provide data on spam and fake accounts.
In a letter to Twitter, the billionaire reiterated his request for details about the bot accounts and said he reserved all rights to terminate the merger, as the company is in “clear substantial breach” of its obligations by not providing him with the information.
Shares of Twitter fell as much as 5.6% to $ 37.92 and traded at a sharp discount on Musk’s offer of $ 54.20 per share, which suggests that investors do not expect the deal to close at the agreed price. Shares last fell 2%, while Tesla rose 1.2%.
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“Twitter has and will continue to share information with Musk to complete the deal in accordance with the terms of the merger agreement,” the company said in a statement.
He intends to close the deal at the agreed price and terms, Twitter added
Musk placed a “suspension” deal in mid-May, saying he would not continue with the offer until Twitter showed evidence that spam bots accounted for less than 5% of total users.
Since then, the takeover saga has seen several twists and turns, raising questions about Musk’s intentions to complete the deal at a set price.
Although Musk has made extensive use of the social media platform to broadcast his views on the deal and the company, this is the first time he has officially threatened to resign.
An image of Elon Musk can be seen on a smartphone placed on printed Twitter logos in this pictorial illustration made on April 28, 2022. REUTERS / Dado Ruvic / Illustration
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“It’s pretty obvious he’s feeling the buyer’s remorse and trying his best to get a price reduction, and I think he can succeed,” said Dennis Dick, a trader at Bright Trading LLC.
“You can see the sales on social media and he realized that he overpaid … all these are tactics, just to get a price reduction.
Musk questioned the accuracy of Twitter’s public documents on spam accounts, saying they should represent at least 20% of the user base. Twitter disagrees, with CEO Parag Agraval providing details on how the company handles spam accounts in one of its latest tweets.
A self-proclaimed absolutist of free speech, Musk said one of his priorities would be to remove spam bots from the platform. The CEO of Tesla Inc. (TSLA.O) owns 9.6% of Twitter and has over 95 million followers online.
As part of the deal, Musk is contractually obligated to pay a $ 1 billion fee for the break-up – part of his $ 219 billion fortune, estimated by Forbes – if he doesn’t complete the deal. Twitter may sue for “specific performance” to force Musk to close the deal and get an agreement from him as a result. Read more
In his letter, Musk said he needed the data to analyze his own Twitter users and did not believe in the company’s “weak testing methodologies.”
“He’s trying to get away from the Twitter deal, it’s the first shot on the other side of the nose,” said Wedbush analyst Dan Ives.
Musk has lined up several high-ranking investors, including Saudi investor Prince Alwaleed bin Talal and Sequoia Capital, to fund the deal.
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Report by Nivedita Balu in Bengaluru; Additional reports from Tiyashi Datta; Writing by Saint Singh; Edited by Anil D’Silva
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