Tesla and SpaceX CEO Elon Musk’s attorneys filed paperwork with the Securities and Exchange Commission on Monday threatening to pull out of the Twitter buyout deal due to lack of transparency from Twitter regarding fake accounts and bots on the platform.
While Twitter has consistently maintained that its testing estimates only about 5 percent or less are fake accounts, Musk said last month that Twitter’s users likely consisted of about 20 percent fake accounts and bots. This number has not yet been confirmed and Twitter has denied such claims.
Musk’s attorneys wrote in the SEC filing that Twitter has only provided data to Musk about its testing methods, and not its actual numbers, which they say is “tantamount to refusing Mr. Musk’s data requests,” and constitutes a “material breach” of the merger agreement. The agreement allegedly allows Musk to pull out of the merger deal at any time if he so chooses.
“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,” the letter reads. Musk has threatened to walk away from the deal before, though experts say by doing so he may be liable for a $1 billion “breakup fee.” Twitter has said throughout that it plans on completing the sale.
“If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently evaluate those estimates,” the letter says. Twitter has given its bot numbers to the SEC consistently over recent years with the understanding that the estimates may be low.
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