The 'takeover tug-of-war' between Elon Musk and Twitter has naturally had a place in a number of events that have garnered attention so far in 2022. Since Twitter agreed to Musk's $44 billion takeover bid in April, changes have begun to occur frequently.
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Just a few days ago, in a letter sent by Musk's team to Twitter's chief legal officer Vijaya Gadde and submitted to the SEC. Musk's side argues that Twitter has not only been refusing to provide Musk with the information he has repeatedly requested, that is used to help him evaluate spam and fake accounts on the Twitter platform.
And, in the response given by Twitter's side, the latest offer involved simply providing more details about the testing methods used by the company itself, whether it was explained in writing or verbally, which is denying Musk's request for data.
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The letter argues that Twitter is trying to obfuscate the issue by describing it otherwise, as Musk has made it clear that he believes the company's lax approach to testing is inadequate, so he must conduct his own analysis, and the data requested is necessary to do so.
The letter also mentions that under various terms of the merger agreement, Twitter must provide the data and information requested by Musk in connection with the completion of the transaction. And as a 'potential owner' of Twitter, Musk is apparently entitled to the requested data, allowing him to prepare for the transfer of ownership of the business and facilitate the financing of his deal.
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To do this, Musk must have a complete and accurate understanding of the core of Twitter's business model, its active user base.
In addition the letter states outright that Musk believes that Twitter's apparent refusal to comply with its obligations under the merger agreement raises suspicions that the company is hiding data for fear that Musk will discover something through his analysis of that data.
Because if Twitter is confident in its publicly available spam estimates, that makes it incomprehensible why the company wouldn't want Musk to make the assessment independently.
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More importantly, the letter ends with this paragraph: based on Twitter's conduct to date, Musk believes that the company is resisting and obstructing his rights to information under the merger agreement. This is a clear and serious violation of Twitter's obligations under the merger agreement, and Musk reserves all rights arising therefrom, including his right not to complete the transaction and his right to terminate the merger agreement.
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Musk decided to hold off on his acquisition of Twitter in May after announcing that he needed to wait for Twitter to provide data to confirm that it had less than 5% of spam and fake accounts. Twitter's CEO Parag Agrawal has since made several statements on his account to try to address Musk's concerns.
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However, Musk was not satisfied with these explanations and also 'spaced out' his reply on his account saying that the deal could not move forward until the Twitter CEO showed proof (spam as well as fake accounts) <5%.
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Now, Musk has lit up with the 'threat' of ending this acquisition and the repercussions have followed. Twitter shares were down 5% in early trading on Monday after the news broke. Twitter's shareholders are also suing Musk, arguing that he has been deliberately using these 'hoopla' to lower Twitter's share price.
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There is speculation that Musk did this because of Tesla's falling stock price, as well as possibly thinking that his previous bid for the Twitter acquisition was a bit high. While the real reason why he did this is not yet known, it seems that the acquisition, which has already had its share of twists and turns, will continue to have non-stop turmoil in the future.