Elon Musk has formally warned Twitter that he may walk away from his $44 billion proposal to acquire the social media company. The billionaire and Tesla CEO alleges that Twitter is actively blocking his requests for information regarding the number of fake accounts and spam bots on the platform.
In a formal letter sent to Twitter’s legal team, Musk’s lawyers stated that the company is resisting and thwarting his rights to access data. This dispute has thrown the massive deal into uncertainty, causing fluctuations in Twitter’s stock price and raising questions about the future of the platform.
The Dispute Over Fake Account Data
The core of this new conflict lies in the number of automated users on the site. Musk has paused the deal verbally in recent weeks, demanding proof that spam bots account for less than five percent of the total user base. Twitter has consistently claimed in its financial filings that false accounts represent a small fraction of its monetizable daily active users.
However, Musk is not satisfied with the company’s testing methods. His legal team argues that he is entitled to conduct his own analysis of the user base. They claim that Twitter’s refusal to provide the raw data is a clear violation of the merger agreement signed in April.
The letter filed with the Securities and Exchange Commission (SEC) outlines these grievances clearly. It suggests that Twitter is not just ignoring the request but is effectively refusing to cooperate. Musk believes that without this data, he cannot evaluate the true financial health of the business he intends to buy.
“Mr. Musk believes Twitter is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement.” – Excerpt from the letter filed by Musk’s legal team.
Experts say this move could be a strategy to renegotiate the price of the deal. By highlighting the bot issue, Musk might be trying to lower the $54.20 per share offer. Twitter, however, has stated it intends to close the transaction at the agreed price and terms.
Allegations of Contract Breach
The legal correspondence explicitly accuses Twitter of a “material breach” of its obligations. This is a serious legal term that could allow Musk to walk away without paying the standard breakup fee, or it could lead to a lengthy court battle. The letter asserts that Musk has the right to terminate the merger if these obligations are not met.
According to the text of the filing, Musk needs the data to prepare for the transition of ownership. His team argues that facilitating the financing of the deal depends on understanding the exact nature of the active user base.
The specific data points Musk is requesting include:
- The methodology Twitter uses to sample accounts for bot detection.
- Raw data regarding daily active users (DAU).
- Details on how the company suspends or restricts fake accounts.
- Information on the “firehose” of tweet data to perform independent audits.
Twitter has previously stated that they share information with Musk in accordance with the merger agreement. They also noted that external estimation of bots is difficult because it involves private user data that cannot be shared publicly, such as IP addresses and geolocation data.
Financial Impact and Market Volatility
Since the news of the letter broke, Twitter shares have seen increased volatility. The gap between Musk’s offer price and the actual trading price of the stock has widened. This gap reflects the market’s growing doubt that the deal will close at the original price, or perhaps at all.
Investors are worried about the stability of the company during this public spat. If Musk walks away, Twitter’s stock could face a significant decline, returning to pre-buyout levels. The following table illustrates the financial stakes involved in this high-profile negotiation:
| Metric | Value / Detail |
|---|---|
| Agreed Offer Price | $54.20 per share |
| Total Deal Value | Approximately $44 Billion |
| Breakup Fee | $1 Billion (payable by Musk if he walks away without cause) |
| Musk’s Current Stake | Approximately 9.2% |
The market is closely watching to see if Twitter will file a lawsuit to enforce the merger agreement. Legal analysts suggest that specific performance clauses in the contract could force Musk to complete the purchase unless he can prove a Material Adverse Effect on the business.
You can read the full details of the correspondence in the official 13D amendment filed with the SEC, which outlines the specific legal arguments made by Musk’s lawyers regarding the data breach accusations.
Timeline of the Takeover Attempt
The relationship between Elon Musk and Twitter has shifted rapidly over the last few months. It began when Musk revealed he had quietly bought a large stake in the company, making him one of the largest shareholders at the time. He was initially invited to join the board of directors, a move that was welcomed by then-CEO Parag Agrawal.
However, the situation changed quickly. Musk declined the board seat days later. Joining the board would have capped his ownership stake and prevented him from taking over the company. Shortly after refusing the seat, he launched a hostile takeover bid, offering to buy 100 percent of the company.
Twitter’s board initially adopted a “poison pill” strategy to prevent the takeover. This defense mechanism allows existing shareholders to buy more stock at a discount if a hostile bidder buys more than a certain percentage. Eventually, the board accepted Musk’s offer of $54.20 per share, citing it as the best path forward for shareholders.
Now, the discussion has moved from financial terms to operational transparency. Musk has listed several changes he wants to make, including:
- Adding an edit button for tweets.
- Open-sourcing the algorithm.
- Eliminating spam bots completely.
- Authenticating all real humans.
What Happens Next for Twitter?
Twitter is now in a difficult position. If they hand over the full “firehose” of data, they risk user privacy concerns and giving away proprietary information to a potential competitor if the deal fails. If they refuse, Musk has a stated reason to exit the deal.
The company has stated that it plans to enforce the merger agreement. This implies a potential legal showdown in Delaware, where the company is incorporated. Courts in Delaware have historically been strict about enforcing merger contracts, making it difficult for buyers to walk away due to “buyer’s remorse.”
According to reports from Reuters, legal experts believe Musk faces an uphill battle to prove that the bot issue is significant enough to cancel the contract entirely without penalty.
For now, employees at Twitter are left in limbo. The internal atmosphere has been described as chaotic, with executives departing and hiring freezes in place. The public battle between the world’s richest man and the influential platform shows no signs of ending quietly.
This situation is developing rapidly. The outcome will determine not just the ownership of Twitter, but potentially the future of online speech and social media business models.
This news is huge and affects everyone who uses the platform! The deal is hanging by a thread and things are getting messy. What do you think about Elon’s move? Is he right to demand the data or is this a tactic?
Share this article now and let us know your thoughts in the comments below!
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Disclaimer: This article reports on financial news and public corporate events. It does not constitute investment advice. Stock market values and legal outcomes are volatile. Please consult a qualified financial advisor before making investment decisions.
