Elon Musk Threatens to Scuttle Twitter Acquisition

Elon Musk threw something a little more substantial than a poop emoji at Twitter Monday, sending a letter to the company, also filed with the Securities and Exchange Commission, in which he threated to scuttle his $44 billion deal to acquire Twitter due to his uncertainty about the extent of fake accounts, bots and spam on the platform. A Twitter spokesperson replied, "Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms." Musk’s letter was a response to a June 1 letter from Twitter in which the company attempted to quell his concerns by providing additional details on the methods it uses to measure fake accounts, bots and spam, which Musk found unsatisfactory. The letter, penned by mergers and acquisitions advisor Mike Ringler of Skadden, Arps, Slate, Meagher & Flom, said Musk has repeatedly requested information since May 9, and Twitter’s response that it was limiting its efforts to “facilitating the closing of the transaction” was not acceptable, adding, “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. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base.” Ringler concluded, “Based on Twitter’s behavior to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement. 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.” The saga began when Musk purchased 9.2% of Twitter’s stock March 14, although he did not file a Schedule 13G form with the SEC until April 4. The day after the Schedule 13G was revealed, Musk was added to Twitter’s board of directors, only to inform CEO Parag Agrawal April 10 that he would not join the board after all. Twitter revealed April 25 that it officially entered into an agreement to be acquired by an entity wholly owned by Musk, with the transaction valued at approximately $44 billion, or $54.20 per share in cash, which would make Twitter a private company upon closure of the deal. Musk revealed in an SEC filing May 5 that he would serve as Twitter’s interim CEO once the transaction closed. The Federal Trade Commission disclosed the following day that it was conducting an antitrust review of the agreement over concerns that free speech could be threatened. A 5:44 a.m. ET tweet from Musk May 13 questioned Twitter’s assertion that spam and fake accounts represent fewer than 5% of its monetizable daily active users. Agrawal responded in a lengthy tweet thread May 16, in which he admitted that spam affects Twitter’s user experience, noted that the platform suspends more than 500,000 spam accounts per day and added, “Unfortunately, we don’t believe that this specific estimation can be performed externally, given the critical need to use both public and private information (which we can’t share). Externally, it’s not even possible to know which accounts are counted as mDAUs on any given day.” Musk responded with the poop emoji heard round the tech world.