Recall that earlier this year, Tesla CEO Elon Musk made a move to buy Twitter for a whopping $44 billion. The deal was however placed on hold for a while after Musk suggested that Twitter provides him with information that will aid him to facilitate his evaluation of spam and fake accounts on the platform.
However, the Twitter board disclosed that there is zero chance that Twitter will simply accept Musk’s assertion, and if he eventually opts out of the deal, things will get messy. Musk however revealed that the more questions he asks about certain things on the Twitter platform, the more his concern grows and he is yet to receive a concrete answer on how many fake or spam accounts are on the platform.
Musk disclosed that he believes 20 percent of Twitter accounts are fake. He however states that such a number is high and needs to be significantly reduced which was his reason for renegotiation of the deal in the first place.
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After much consideration from the Twitter board, it disclosed its plans to close the transaction and enforce a merger agreement between Musk and Twitter. The board and Musk agreed to a transaction of $54.20 per share as they believe the deal is in the best interest of all its shareholders.
However, the deal seems not to sit well with Musk who recently disclosed that he is terminating the deal due to the CEO’s refusal to show proof of the 5% fake accounts. In a letter by Musk’s lawyer, Mike Ringler he disclosed that his client had complained to Twitter’s board seeking data about fake or spam accounts for almost two months, yet they have failed to provide the information.
In the letter, it reads; “Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information”.
In response to the letter, the Chair of Twitter’s board Bret Taylor via a tweet stated that the board is committed to closing the transaction on the price and terms that have earlier been agreed upon by the two parties.
However, with Musk, they plan to pursue legal action to enforce the merger agreement. He however disclosed that Twitter is confident that it will emerge victorious in the Delaware Court of Chancery.
The deal requires that if Musk pulls out, he will be mandated to pay Twitter the sum of $1 billion termination fee and could be subjected to additional litigation due to damages.
Twitter and Musk already have a binding agreement signed by him as they intend to hold him to it. Recall that Twitter in a journalistic briefing already shed more light on how it counts spam accounts, disclosing that it removes 1 million spam accounts daily, as the accounts represent below 5%.
However, Musk seems not to be buying into that, as he believes that there is more than what meets the eye. This has raised concerns from people, with a lot of them stating that if Musk really wanted to purchase Twitter he would have done so a long time ago, because it makes no sense to pull out of the deal by using bots and spam as an excuse which is lame.
It is believed that the spam accounts are not the only reason Musk might try to opt out of the deal, as Twitter’s share price fell dramatically since his takeover bid in April, leading to the impression that he is overpaying.