Musk set to bail on Twitter deal
In a new SEC filing, Elon Musk claims Twitter’s refusal to provide him with the user data he wants provides grounds for termination of the merger agreement.
The sticking point between Musk and Twitter remains the company’s assessment of the quality of its users. Twitter reckons less than 5% of them are spam or fake but Musk remains unconvinced and wants to do his own assessment. “Mr. Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis,” says the filing. “The data he has requested is necessary to do so.”
“Based on Twitter’s behavior to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” it concludes.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”
With Musk being the polarizing figure that he is, the responses of Twitter’s band of dilettante contract lawyers seems to depend on their pre-existing opinion of him. Those sympathetic to Musk will see Twitter’s refusal to grant his reasonable request as a deal-breaker, while those hostile to him seem to have decided he’s just trying to squirm out of a deal he regrets making. Of course nobody knows what he’s really thinking but this saga seems set to drag on for some time yet.
TESLA CEO MUSK – TWITTER REFUSAL ON SPAM INFO IS BREACH OF MERGER PACT$TWTR -7%
— Neil Wilson (@marketsneil) June 6, 2022
Elon Musk accused Twitter of “resisting and thwarting” his right to information about fake accounts on the platform, calling it a “clear material breach” of the terms of their merger agreement in a letter to the company on Monday. Our view; Musk looking to walk away from deal.
— Dan Ives (@DivesTech) June 6, 2022
This was telegraphed for weeks, but also, the terms of the deal don’t seem to allow this. Also, he explicitly waived his right to further due diligence.
Honestly, why would anyone ever trust Elon about anything after this nonsense? https://t.co/09XKYGyy49
— Mike Masnick (@mmasnick) June 6, 2022
UPDATE – 10:00 7/6/22: Texas Attorney General Ken Paxton has joined the fun by launching an investigation into whether Twitter is misleading everyone over fake accounts.
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