A message from the founder of Tesla in which he warns that he can cancel the operation makes the shares of the social network fall.
Elon Musk is still playing cat and mouse with Twitter. The founder of Tesla has warned this Monday, in a letter to the company, that he could back down on his intention to buy the technology if the social network does not provide data on false accounts and spam. It is not Musk’s first threat on the subject, but it is the first made through official channels, in direct communication to the company, and not through tweets, since he approached the purchase of Twitter in April. On the table are the 44,000 million dollars that the richest man in the world has promised to close the acquisition.
According to the statement, Twitter has made a “clear material breach” of its obligations, and therefore Musk reserves all rights to terminate the merger agreement. At the opening of the trading floor, Twitter shares fell 5.5%, to a price of $33.97 per share, far from the $54.20 offered by the tycoon, a sign that investors trust less and less when the operation goes ahead. At the end of the trading day, the titles had recovered, with a more moderate fall of 1.5%, and a price of 39.57 dollars.
Twitter had so far downplayed Musk’s repeated warnings that the deal was “on hold”, pending data to continue negotiations. In mid-May, Musk announced a first “temporary pause” for the blue bird network to provide him with data on the percentage of false accounts.
The insistence of the founder of Tesla and SpaceX on having more information on Twitter has now taken a qualitative leap, expressing in the letter his suspicion “that the company is hiding the requested data”, which introduces a new variable in which supposedly It was going to be the operation of the year: bad faith. Musk stresses that Twitter’s current management is “resisting and thwarting” the transfer of information, amounting to a “clear material breach” of the terms of the purchase agreement.
Theoretically a staunch defender of freedom of expression, to the point of being willing to return the account to Donald Trump – it was canceled after instigating his followers in the assault on Capitol Hill – Musk insists that the existence of spam or false accounts in the social network it rises to at least 20% of its user base, compared to the minimum 5% that the Palo Alto firm admits. Texas Attorney General Ken Paxton today announced an investigation into “potentially false reports about his bot accounts, ” in possible violation of state law.
Musk reiterates that he needs the data to conduct his own Twitter analysis and that he doesn’t believe in the company’s “loose methodologies.” “Musk clearly has a right to the requested data to enable him to prepare for the transition of the business from Twitter to his ownership and to facilitate the financing of his transaction,” his lawyers write in the letter.
Current Twitter CEO Parag Agrawal has publicly argued with Musk on Twitter about bots. Agrawal has explained that an undetermined number of employees analyze “thousands of accounts” to determine the incidence of false accounts, while he pointed out that he could not give more details for due privacy. “Unfortunately, we do not believe this specific estimation can be done externally, given the critical need to use both public and private information,” Agrawal wrote in May in response to Musk’s early criticism of the matter.
Financing is the other hot potato in the hands of Musk, who claims to have the necessary financial backing for cooperation, through shares and loans and with shareholders such as the Saudi investor Alwaleed bin Talal, a member of the royal family, and the firm of venture capital Sequoia Capital, California. At the end of May, he announced that he was giving up buying Twitter with debt tied to his Tesla shares.
The stock’s slide on Monday underpins doubts about Musk’s initial offer of $54.20 a share and further widens the gap between market expectations and the billionaire’s price tag. Since the purchase of Twitter was announced on April 14, the shares have barely exceeded $50, and very briefly.