Musk threatens to kill Twitter deal over claimed lack of consumer information transparency

In a recent SEC submitting this morning, Twitter shared a letter it acquired from Elon Musk’s authorized workforce indicating displeasure with the corporate’s provided info concerning the extent of “spam and pretend accounts” on its service. This is similar concern that the expertise entrepreneur has posted about extensively since his deal to purchase the social media platform was settled earlier within the yr.

Per the letter — which you may learn in its entirety right here — Musk considers Twitter’s “newest supply to easily present extra particulars concerning the corporate’s personal testing methodologies, whether or not by written supplies or verbal explanations, [as] tantamount to refusing [his] information requests,” requests that the SpaceX and Tesla CEO says will assist “facilitate his analysis of spam and pretend accounts on the corporate’s platform.”

The letter says that extra information (and never simply clarification of how the present information was gathered) on Twitter’s non-human customers — each pure and spam — is very important for serving to shut the transaction from a financing perspective. “As Twitter’s potential proprietor, Mr. Musk is clearly entitled to the requested information to allow him to organize for transitioning Twitter’s enterprise to his possession and to facilitate his transaction financing,” the letter reads.

At the tip of the brief correspondence, Musk’s authorized workforce threatens to kill the deal (emphasis: TechCrunch):

Primarily based on Twitter’s conduct up to now, and the corporate’s newest correspondence particularly, Mr. Musk believes the corporate is actively resisting and thwarting his info rights (and the corporate’s corresponding obligations) underneath the merger settlement. This can be a clear materials breach of Twitter’s obligations underneath the merger settlement and Mr. Musk reserves all rights ensuing therefrom, together with his proper to not consummate the transaction and his proper to terminate the merger settlement.

Combating phrases certainly.

Within the wake of Musk’s numerous strikes to at first affect the social community, and later to buy it wholesale, the controversial poster has made numerous claims about how Twitter counts non-human customers. Musk went so far as tweeting excrement-themed emojis at Twitter’s CEO on the social service, after Parag Agrawal penned a thread on how the corporate handles spam and bots.

The tempo at which Musk went from charging headfirst into forcing Twitter to simply accept his bid, valuing the corporate at $54.20 per share, to attacking the corporate, its management, and information regarding non-human customers was fast — and, many speculated, indicative of his need not to finish the deal on the agreed upon worth. Because the deal was pressured into existence, the worth of expertise shares has broadly fallen, making the transaction seem costlier as time has gone alongside.

Now now we have, from Musk’s workforce, a transparent risk that he could stroll if he doesn’t get extra info. Whether or not Musk’s calls for are in good religion we depart to you. However the scenario does elevate an attention-grabbing conundrum. If Twitter does need to pressure Musk to pay up on the agreed-upon worth, it could concede and share extra information. But when it does, what’s to cease Musk from shitposting on Twitter in regards to the disclosed info? His letter says that he’ll “in fact adjust to the restrictions offered underneath Part 6.4, together with by making certain that anybody reviewing the info is certain by a non-disclosure settlement,” however does anybody take that declare significantly?

Fortunately, if Twitter doesn’t need to promote to Musk — recall that the corporate initially enacted a poison-pill protection to fend off his overtures — it might probably merely not share any extra info, permitting its potential acquirer to attempt to wriggle out of the deal.

Traders are betting that the latter case is extra probably, promoting shares of Twitter this morning, pushing the worth of the corporate’s inventory down by 5.6% because the markets prepped for the open.

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