Elon Musk Issues Threat Over Twitter’s Refusal To Supply Him With Information That Would Assist Him In Evaluating Spam And Phony Accounts On Twitter
In the wake of Elon Musk’s threat to sever the merger agreement if Twitter does not supply him with the details he wanted on spam and bogus accounts, Twitter’s stock price plummeted on Monday.
As Musk explains in an open letter to Twitter NYSE: TWTR, -0.77 percent, the social media company has consistently declined to supply him with information that would assist him in evaluating spam and phony accounts on Twitter. “Twitter’s promise to disclose its testing techniques is the same as rejecting my demands,” Tesla Inc. CEO Elon Musk stated.
MarketWatch received an emailed comment from Twitter stating that it “has and will continue to constructively exchange information” with Musk in response to the letter that Musk sent them.
As part of the merger agreement, Musk added, Twitter is bound to share information for “any legitimate business purpose” relevant to the deal’s completion. According to Tesla CEO Elon Musk, Twitter must also help him acquire funding for the purchase by supplying information he “fairly” asks for.
To prepare for the transition of his ownership and to ease the financing of the acquisition, Mr. Musk’s letter said that he was “obviously entitled,” Musk wrote. A comprehensive and correct grasp of Twitter’s economic model—its active user base—is required for him to achieve both.”
In light of the fact that he sees this as a “clear material breach” of the merger agreement, Musk reserves all rights arising therefrom, including the right not to complete the transaction and the right to terminate the merger agreement, according to the letter he sent to Twitter’s CEO Jack Dorsey last week.
It’s “additional suspicion,” Musk added, that Twitter is afraid of what he could uncover, because of Twitter’s hesitation to release the information.
Texas Attorney General Ken Paxton also said on Monday that he is looking into whether Twitter has misled Texans about the amount of “bot” accounts that account for a portion of its users.
Texas Attorney General Greg Paxton tweeted, following the Over the “apparently orchestrated de-platforming” of the President, Trump supporters attacked the US Capitol on Jan 6, 2021. To respond, Twitter filed suit against Paxton in 2021, alleging that Paxton had used state authority to exact political retribution.
With regard to its existing merger deal, Twitter has said that it feels this is in its shareholders’ best interest.
On Twitter, Elon Musk forfeited his right to do due diligence before he agreed to the conditions of the transaction. He said that his acquisition proposal was no longer subject to the completion of financing and business due diligence, Twitter disclosed in a filing detailing the merger agreement.
As a result of Twitter’s declaration that it intends to hold Tesla CEO Elon Musk to the terms of the transaction, its shares jumped 1.6 percent on Monday. (The agreed-upon purchase price for the shares was $54.20 per share.)
As he continues to try to obtain leverage to either drop his offer for Twitter or fully walk away, Angelo Zino, a CFRA analyst, believes that Musk is “playing hardball” in order to gain leverage.
It’s becoming more impossible to see a situation in which this doesn’t end up in court, according to Zino in a message to clients.
Last Friday, after first seeming to announce his intention to purchase Twitter, Musk threatened that he would raise the amount of money he would put up to do so. Twitter’s stock has risen 6.4 percent since that announcement, and is still trading above its pre-rally highs.”
Shares were up 0.4 percent at lunchtime Monday but were up as high as 4.4% earlier when Musk’s letter was made public. The plan to purchase Twitter has been considered by some investors as a distraction from operating Tesla, which might lead to a big reduction in Musk’s shareholding in the electric car producer.
In the last three months, Twitter’s stock has risen 17.6%, while Tesla’s stock has down 15.7%.
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