Elon Musk ‘Looking for Excuse’ to Ditch Agreement to Buy Twitter, Say Legal Experts After Fresh Bot Claims
The Tesla boss Elon Musk’s USD 44 billion bid to buy Twitter may have hit the rocks, with some legal experts claiming that the billionaire may be using the 'preponderance' of bots on the social media platform “as an excuse to abandon or renegotiate” his deal.
Bloomberg, which noted that the sale deal “has looked better and better for Twitter” in recent weeks, with share prices tumbling, quoted Andrew Freedman, a partner and activist investment specialist at the legal firm Olshan Frome Wolosky, as stating:
“He’s jockeying here. He’s trying to create a paper trail. The unfortunate thing for Musk is that termination provisions under merger agreements don’t allow for buyer’s remorse.”
However, the same media outlet quoted two sources who it claimed it could not name as they “weren’t authorized to speak publicly” as stating that “behind the scenes,” Musk’s deal to buy Twitter is “proceeding,” with “both sides” still “meeting regularly and sharing information.”
Publicly, however, the story is very different. AP reported that Musk’s legal team had submitted a letter that accused Twitter of only providing details about Twitter’s testing methods. Musk had instead asked to see data on bots on the platform and had previously claimed that up to 20% of accounts may be automated. Twitter leadership has claimed the figure is no higher than 5%.
Musk has previously called cryptoasset-related bots the “single most annoying problem on Twitter.”
Musk’s lawyers wrote that Twitter’s refusal to comply was “tantamount to refusing” Musk’s “data requests,” and represented a “material breach” of the deal agreement. This, they argued, gives Musk the right to walk away from the deal.
“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.”
Legal experts claimed that Musk’s options may be limited. If he backs out of the deal, he will have to compensate Twitter to the tune of USD 1 billion.
AP quoted Brian Quinn, a law professor at Boston College, as stating that Musk has already waived his ability to ask for more due diligence – meaning that courts would be unlikely to back any attempt to renegotiate the deal or turn his back on it.
“[Musk is] looking for a way out of the deal or something that will get leverage for a renegotiation of the price. I doubt he would be allowed to walk away. At some point, the board of Twitter will tire of this and file a suit [to force Musk to stick to the original deal].”
But – perhaps ostensibly, perhaps not – the bot issue appears to be a serious bone of contention for Musk. Twitter has told American regulators about its 5% estimates before, but has conceded that its bot count may err on the low side.
In the letter, Musk’s lawyers wrote”
“If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company’s reluctance to allow [him] to independently evaluate those estimates.”
Musk has previously stated that the deal is “on hold,” but legal experts speaking to both media outlets appeared to suggest he has little in the way of wriggle room.
Bloomberg quoted Jill Fisch, a business and law specialist at the University of Pennsylvania’s Carey Law School, as stating that Musk was attempting to “reach the capital markets” with his legal team’s statement.
In its own statement made in response to the bot accusations, Twitter said that it “has and will continue to cooperatively share information” with Musk.
Twitter added that it thought the deal was now in the best interest of all of its shareholders and “intends” to “close the transaction and enforce the merger agreement at the agreed price and terms.”
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