Elon Musk has threatened to walk away from the deal to purchase Twitter before, but he has now put it down in writing as the transaction continues to drag.
In a letter addressed to Twitter’s chief legal officer, Vijaya Gadde, Musk repeated his demand for information on the number of bot accounts on the platform. If Twitter refuses to hand over the data, Musk threatens to walk away from the $44 billion deal.
Musk claimed he had the right to cancel the deal as Twitter breached its duties by refusing to furnish him with the information he requested.
On the trading floor, Twitter shares dropped by 5.5 percent to $38.13, significantly lower than the $54.20 Musk offered to buy the company.
The billionaire CEO of several companies has mentioned on Twitter he could abandon the deal, but it appears he is getting serious about it by putting it down in writing. According to the letter, “Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data.”
Musk claims the information would is not meant to perform due diligence or reopen negotiation, as some pundits have claimed, but help him prepare to take over the social media. He did say last month that the deal would be on hold pending when Twitter would comply with his demands. Musk maintained he did not believe in Twitter’s “lax testing methodologies.”
Twitter CEO Parag Agrawal had taken to Twitter to explain that spam accounts usually use a combination of human and automation to escape detection. He also claimed that an external person could not accurately calculate the number of bots because it required confidential information that the company could not share.
Some analysts, including Wedbush’s Dan Ives, have claimed Musk is attempting to abandon the deal and would use any excuse he can find. However, Musk remains the second-largest shareholder in Twitter at 9.6 percent.
Musk has said one of his major aims is to eliminate bots from Twitter. He also wants to restore free speech on the platform, as he is of the opinion that it is in jeopardy. He has said he would welcome back former President Donald Trump, who was kicked off the platform, although the fellow billionaire has said he would not be returning but sticking to his Truth Social network.
Musk is one of the most prolific users of Twitter, with more than 90 million followers. He often posts updates about his companies (Tesla does not have a press department) and shares memes. He also uses his posts to attack politicians and his perceived rivals.
Also in on the deal to take Twitter private are Saudi Arabian investor Prince Alwaleed bin Talal and Sequoia Capital.
In other Twitter news, Ken Paxton, the attorney general of Texas, has announced it is opening an investigation into Twitter for potentially deceiving its investors with the way it handles bots. In a statement, the attorney general’s office said, “Attorney General Paxton issued a Civil Investigative Demand (CID) to investigate whether Twitter’s reporting on real versus fake users is ‘false, misleading, or deceptive under the Texas Deceptive Trade Practices Act.”
Paxton has requested 23 items as part of his investigation, including daily, monthly, and monetizable active users. He also wants “documents sufficient to show the number of inauthentic Twitter Accounts for each month from 2017 to the present, broken down by category of inauthentic account (i.e., Fake Account, Spammer Account, and Bot Account) if available.”
However, industry experts have pointed out how unusual Pax’s probe is. Marc Fagel, who was once the regional director of the SEC’s office in San Fransisco, remarked, “States aren’t necessarily equipped to do this sort of sophisticated investigation. It’s one thing if you’re dealing with a local company, but if you’re talking about a national, publicly-traded company in another state, that’s the province of the SEC.”