Elon Musk has threatened to pull out of the Twitter deal as he accuses the social media company of not offering detailed information about spam and fake accounts.
In a securities filing on June 6, Musk said Twitter is breaching the agreement by not meeting his demands for transparency. The billionaire entrepreneur believes the company's resistance to provide additional information 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."
In reply, the social network said in a statement that it "has and will continue to cooperatively share information" with Musk. Twitter said it believes the deal is in the best interest of all shareholders and intends to "close the transaction and enforce the merger agreement at the agreed price and terms.”
The company reiterated it would hold Elon Musk accountable to the terms of his proposed $44 billion takeover offer if he pulls out of the deal.
That's where things could get complicated for the Tesla CEO as the proposed takeover includes a $1 billion breakup fee for each party. Mind you, Musk cannot simply walk away from the deal by paying the $1 billion fee. The merger agreement also includes a specific performance provision that allows Twitter to force Musk to consummate the deal, according to the original filing seen by Automotive News.
More specifically, should the deal end up in court, Musk might be obligated to complete the merger rather than pay his way out of the deal.
Last month, Musk said he wouldn't go ahead with his offer unless Twitter can prove bots make up less than 5% of its users, as per the company's public filings. The Tesla CEO has estimated that fake accounts make up at least 20%. In the most recent filing, he said he doesn't believe "the company's lax testing methodologies are adequate so he must conduct his own analysis."
Twitter CEO Parag Agrawal said the social media network couldn't share more specifics regarding bots because of privacy concerns, but noted the company has human reviewers looking at "thousands of accounts" to determine the prevalence of bots.
Musk's demands about bots have led some analysts to believe it's a negotiating tactic to lower the price or to walk away from the deal altogether.