Elon Musk offered his strongest suggestion yet that he could cancel his bid to purchase Twitter if the company doesn’t hand over information about the number of spam bots on its platform.
Musk’s legal team submitted a Securities and Exchange Commission filing on Monday that reiterated his request for information from the social media platform and laid down an ultimatum for the company.
“Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” according to the SEC filing. “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.”
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Musk claimed that “Twitter’s latest offer to simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk’s data requests.” He also alleged that the company’s attempt to characterize its response as anything else is “merely an attempt to obfuscate and confuse the issue” and that Twitter’s “lax testing methodologies” are not adequate to confirm the company’s claims that only 5% of Twitter users are spam bots.
“As Twitter’s prospective owner, Mr. Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing,” The filing argues. “To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base.”
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Musk tweeted on May 10 that the Twitter deal was “on hold” over allegations that the company had not accurately reported its spam bot numbers. While Twitter CEO Parag Agrawal attempted to defend and explain the company’s approach to determining if an account is a bot on May 16, Musk dismissed the explanation. The billionaire has regularly claimed that the spam bot user count is 20% or higher and that a lower price is “not out of the question.” Twitter has said it is “committed” to the price Musk originally proposed and does not intend to budge.
While Musk claims he can cancel his prospective deal, the process would be complicated and expensive, according to experts. He would likely face a fairly large lawsuit and a $1 billion fee.
Representatives from Twitter did not respond to requests for comment from the Washington Examiner.
