September 29, 2022

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Musk’s ‘Buyer’s Remorse’ Won’t Get Him Out of Twitter Deal

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(Bloomberg) — Elon Musk formally and forcefully revived his assertion that Twitter Inc. has a serious bot problem, and threatened to walk away from his deal to buy the company if the social network doesn’t do more to prove its users are real people.

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Legal experts widely speculated that Musk is using the bot issue as an excuse to abandon or renegotiate the deal, which has looked better and better for Twitter as the broader stock market has taken a dive in recent weeks. Twitter shares were up slightly Tuesday morning in New York.

In a securities filing on Monday, Musk said he thinks Twitter is breaching their agreement by not meeting his demands for more information about spam and fake accounts. But behind the scenes, the deal is proceeding, according to people familiar with the matter. Both sides have been meeting regularly and sharing information, said two of the people, who weren’t authorized to speak publicly.

“He’s jockeying here — he’s trying to create a paper trail,” said Andrew Freedman, a partner at the law firm Olshan Frome Wolosky LLP, who is an expert in activist investment. “The unfortunate thing for Musk is that termination provisions under merger agreements don’t allow for buyer’s remorse.”

Last month, Musk said he was putting the deal “on hold” until the social media giant can prove bots make up fewer than 5% of its users, as the company has stated in public filings. Musk has estimated that fake accounts make up at least 20% of all users.

But Twitter said it has indeed shared information with Musk on how it calculates the number of spam accounts on the service, and executives have told employees that Musk can’t just put the deal on hold as the two sides have signed a merger agreement. On Monday the company reiterated that it will hold Musk accountable to the terms of his proposed $44 billion takeover, a suggestion that even the company believes he may be trying to blow up the deal.

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2022-06-07 09:42:46

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