One of the year's biggest tech stories is the proposed acquisition of Twitter by Elon Musk in a deal that could be worth about $44 billion. It all happened so fast and, ever since, it's seemed like Musk has been trying to back away: after announcing that the deal was "temporarily on hold" thanks to bots, the billionaire has subsequently dedicated a considerable portion of his time to winding-up Twitter executives and complaining about the platform's transparency.
Musk's legal team has sent a new letter to Twitter that continues to bang the drum about bots. Dated June 6 and addressed to Twitter's chief legal officer Vijaya Gadde, the letter says in part:
"Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company’s platform. 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."
It goes on to say that "Twitter must also provide reasonable cooperation in connection with Mr. Musk’s efforts to secure the debt financing necessary to consummate the transaction, including by providing information 'reasonably requested' by Mr. Musk (Section 6.11)." It goes on to cite various other reasons why Musk's team believe Twitter has to hand over the data he wants, before things take a bit of a nasty turn: "At this point, Mr. Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data due to concern for what Mr. Musk’s own analysis of that data will uncover."
Twitter legal just called to complain that I violated their NDA by revealing the bot check sample size is 100!This actually happened.May 14, 2022
This is essentially the set up for a warning that will come as no surprise to people who've been following the saga. Musk tweeting about what happened with the deal is one thing: here his lawyers tell Twitter directly that this particular issue may lead to the deal being cancelled:
"Mr. Musk believes the company is actively resisting and thwarting his information rights [...] 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."
So that makes it official. Only Musk knows what the play here is: it may well be that the initial offer wildly overvalued the company and he's after a cheaper price. It may be that Twitter was something of an impulse purchase, wild as that seems, and he wants to back out entirely. And way back in a distant third place, perhaps he really is worried about bots.
The deal depends on Musk assembling a $43.4 billion finance package to pay $54.20 per Twitter share. At the time of writing Twitter's shares are trading at around $39.50, which is in the context of a wider market downturn that has also hit Tesla: even so, it makes Musk's initial offer seem generous to say the least.
But don't take my word for it: here's a Wall Street tech analyst who works for Wedbush Securities.
Elon Musk accused Twitter of “resisting and thwarting” his right to information about fake accounts on the platform, calling it a “clear material breach” of the terms of their merger agreement in a letter to the company on Monday. Our view; Musk looking to walk away from deal.June 6, 2022
Twitter CEO Parag Agrawal has remained silent, which is probably for the best: last time he engaged with Musk in public, Agrawal tweeted about the failings of external studies on Twitter bots. Musk replied to this tweet with a poop emoji.
So the will-he-won't-he saga of the billionaire troll continues. Should Musk pull out of the deal, he will have to pay Twitter a 'cancellation fee' of $1 billion—though if it comes to that, you can be sure the lawyers will spend years haggling over the actual amount. As John Paul Getty, the richest man of his time, once remarked in another context: "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."
The Twitter takeover seemed like one of the year's biggest tech stories: but now it's for very different reasons. Musk does seem to be looking for a way out, or at the very least a lower price—but at the same time keeps tweeting frankly bizarre custom images like this, which suggest otherwise. If the deal does still happen, perhaps this will be the first multi-billion corporate acquisition where the new owner celebrates with a meme.
