Elon Musk has announced that he is withdrawing from the $44 billion deal to purchase Twitter, putting doubts on the future of the social media company.
Musk filed a securities filing Friday accusing Twitter of lying about how many bots and spam accounts it has on its platform. He also claimed that Twitter failed to supply the material he requested. This includes data about the number of spam and bot accounts on Twitter, as well as the company's method for calculating user numbers. It also contains backup materials that detail its financial valuation.
The letter stated that "This information was fundamental to Twitter’s business and financial performance, and it is necessary to consummate Musk's purchaseout." "Twitter has either failed to or refused to provide the requested information. Twitter has sometimes ignored Mr. Musk's requests. Sometimes it has rejected them for reasons that seem unjustified. Other times it has claimed to comply but provided Mr. Musk with incomplete or unusable data.
The letter claims that Musk's advisors analysed the number of bots and concluded that Twitter had lied about their presence, despite Twitter's protestations.
According to the letter, the true number of bots on the platform is "wildly higher than 5%" and cites "[p]reliminary analyses by Mr. Musk’s advisors of all information provided by Twitter up until now."
Twitter has maintained that less than 5% are fake accounts or spammers for as long it has been a publicly traded company.
Musk stated that he had notified Twitter on June 6 of the company's lapses, meaning that the company has now run out of time to provide the information he requested.
Bret Taylor, the chairman of Twitter's board, stated that the company would take legal action against Musk to stop him from selling the company.
Taylor stated on Twitter that the Twitter Board was committed to closing the transaction at the price and terms set by Mr. Musk. Taylor also said that it would pursue legal action to enforce its merger agreement.
The Twitter Board is determined to close the transaction at the price and terms that Mr. Musk agreed to and will pursue legal action to enforce the merger agreement. We are certain that we will prevail before the Delaware Court of Chancery.
The buyout was approved by Twitter's board two weeks ago.
Musk will be responsible for $1 billion termination fees if the acquisition agreement is not signed.
The latest twist in months-long drama pitted the richest man in the world against an influential internet company. Each side sought to gain leverage through strategically publishing information on Twitter.
Musk has been publicly harping on Twitter about the number bots that are available on the platform. This has been a long-standing complaint for Musk, a social media celebrity who has more than 100 million followers. Musk also voiced his disapproval of Twitter's messaging policies and practices. He described Twitter as an important platform for free speech and suggested that he would reverse the ban on ex-President Donald Trump.
Many technology analysts believe Musk's public doubts over Twitter's solvency, after he signed a binding agreement to purchase it, was a negotiation ploy to get Twitter cheaper. Musk offered to buy Twitter in April just as the stock markets were beginning their long fall. This lowered the value of Twitter and Musk's personal fortune which includes Tesla stock.