Tesla CEO Elon Musk has threatened to withdraw his $44 billion bid for Twitter, accusing the business of hiding details regarding its spam bot and fake accounts.
The elephant in the room for the Twitter board is Musk has claimed yet again that his Twitter deal 'cannot move forward.'
In a letter to Twitter, the billionaire reaffirmed his request for information on bot accounts and stated that the corporation was in a "clear material breach" of its commitments by failing to provide him with the information.
Twitter shares fell as high as 5.6 percent to $37.92, trading at a sharp discount to Musk's offer of $54.20 per share, implying that investors did not anticipate the transaction to occur at the agreed-upon price. They were previously down 2.7 percent.
"Twitter has and will continue to cooperatively share information with Musk to consummate the transaction in accordance with the terms of the merger agreement," the company said in a statement.
Twitter has added Musk placed the deal "temporarily on hold" in mid-May, stating that he will not proceed with the offer until Twitter can demonstrate that spam bots account for less than 5% of its total users.
Since then, the takeover process has taken several twists and turns, raising suspicions about Musk's plans to complete the transaction at the agreed-upon price.
Although Musk has frequently used Twitter to express his thoughts on the acquisition and the company, this is the first time he has openly threatened to walk away.
"It's fairly obvious that he has buyer's remorse and he is trying whatever to get a reduction in price, and I think he may succeed," said Dennis Dick, a proprietary trader at Bright Trading LLC.
"You can see the sell-off in social media stocks and he has realised that he overpaid [...] all these are tactics just to get a price reduction."
Musk has questioned Twitter's public filings about spam accounts, alleging that they must account for at least 20% of the user base.
Twitter has disagreed, with Chief Executive Parag Agrawal recently tweeting details on how the business controls spam accounts.
Musk, a self-described free-speech absolutist, has stated that one of his top priorities will be eliminating "spam bots" off the site.
The Tesla Inc CEO owns 9.6 percent of Twitter and has over 95 million followers.
According to Forbes, Musk is contractually forced to pay a $1 billion breakup fee if the sale is not completed – a portion of his $219 million fortune.
Twitter can sue Musk for "specific performance" to compel him to complete the transaction and get a settlement from him as a result.
Musk stated in his letter that he required the data to do his own analysis of Twitter users and did not trust the company's "lax testing methodologies."
“He is trying to walk away from the Twitter deal, this is the first shot across the bow,” Wedbush analyst Dan Ives said.
Musk has lined up several high-profile investors, including Saudi Arabian investor Prince Alwaleed bin Talal and Sequoia Capital, to fund the deal.
Agrawal, in response to Musk's agitation, said on Monday that Twitter manually checks thousands of accounts every quarter to determine how many should be counted as spam.
Agrawal said Twitter 'shared an overview of the estimation process with Elon a week ago.'
He tweeted that spam 'harms the experience for real people on Twitter' and that the company is 'strongly incentivized to detect and remove as much spam as we possibly can, every single day.'
'Anyone who suggests otherwise is just wrong,' Agrawal tweeted.
Musk replied to the CEO's tweet thread by first asking why Twitter doesn't just call users to verify their identity - and then by posting a poop emoji.
Analyst Dan Ives said that the changing stock market and the challenge of financing the deal, 'has caused Musk to get cold feet' and that the issue of bots is 'likely more of a scapegoat to push for a lower price.'
Ives argued that no one else is likely to match Musk's deal, and Musk knows it
'The elephant in the room for the Twitter board is Musk can walk away for a $1 billion as a small breakup fee (for Musk-all relative) and likely cite the bot/fake account issue as the reason, even though this likely would be contested by Twitter in the courts,' he said, according to The New York Post.
