In a fresh SEC filing this morning, Twitter shared a letter it received from Elon Musk’s legal team expressing dissatisfaction with the company’s proposed information about the level of “spam and fake accounts” on its service. It’s the same concern that the tech entrepreneur has been writing about extensively since his deal to buy the social media platform was sealed earlier this year.
By letter – which you can read in full here Musk believes that “Twitter’s latest offer is simply to provide additional information about the company’s own testing methodologies, whether in written submissions or verbal explanations, [as] tantamount to a refusal [his] data requests,” which the CEO of SpaceX and Tesla says will help “make it easier for him to assess spam and fake accounts on the company’s platform.”
The letter says that more data (not just an explanation of how the existing data was collected) about non-human Twitter users – both natural and spam – is important to closing the transaction from a funding point of view. “As the alleged owner of Twitter, Mr. Musk is clearly entitled to the requested data, which will enable him to prepare for the takeover of the Twitter business and facilitate the financing of his transaction,” the letter said.
At the end of a short email, Musk’s legal team threatens to derail the deal (TechCrunch highlights):
Based on Twitter’s behavior to date, and in particular the company’s most recent communications, Mr. Musk believes the company is actively resisting and violating his rights to information. (and related obligations of the company) under the merger agreement. This is a clear material breach of Twitter’s obligations. merger agreement and Mr Musk reserves all rights arising from this including his right not to transact and its right to terminate the merger agreement.
Truly fighting words.
After various steps, Mask at first influence the social networkas well as later buy it in bulkthe controversial poster made a number of claims about how Twitter views non-human users. Musk went so far as to write a poop-themed emoji to Twitter’s CEO on the social service after Parag Agrawal wrote a thread about the company’s handling of spam and bots.
The speed with which Musk went from swiftly forcing Twitter to accept his offer, valuing the company at $54.20 a share, to attacking the company, its management, and data on non-human users was swift—and many felt was indicative of his desire not to make a deal at the agreed price. Because the deal was forced, the value of the tech stocks fell overall, making the transaction look more expensive over time.
We now have a clear threat from Musk’s team that he may leave if he doesn’t get more information. How conscientious Musk’s claims are, we leave it up to you. But the situation raises an interesting mystery. If twitter does want to force Musk to pay the agreed price, he can make concessions and provide more data. But if that happens, what’s to stop Musk from tweeting about the disclosures? His letter states that he “will of course comply with the restrictions in Section 6.4, including ensuring that anyone who views the data is bound by a non-disclosure agreement,” but does anyone take this statement seriously?
Fortunately, if Twitter does not want to be sold to Musk, we recall that the company initially applied protection against poison pills to fend off his initiatives – she simply cannot share information anymore, allowing her potential buyer to try to get out of the deal.
Investors are betting that the latter case is more likely, selling shares of Twitter this morning, which sent the company’s share price down 5.6% as markets braced for reopening.
Credit: techcrunch.com /