Elon Musk threatens to end Twitter deal without spam account information

Mr Musk, who signed a deal to acquire Twitter in April, has in recent weeks threatened to suspend the deal because of its number of fake accounts. Last month, he tweeted that “the deal can’t move forward” until Twitter shows “proof” that bots make up less than 5% of its users. He made similar remarks at a conference in Miami, indicating he may be trying to lay the groundwork for a renegotiation of the deal.

In doing so, Mr. Musk appeared to be laying the groundwork for the argument that Twitter had suffered a “material adverse change” or a change that would materially affect its business, which could allow it to break the agreement. Lawyers have questioned the merits of that argument, especially since Twitter has long since disclosed that fake accounts make up around 5% of its users. Mr. Musk’s letter on Monday, however, represented a new strategy.

“What he’s actually doing is a much smarter attempt to get out of the merger deal,” said Ann Lipton, professor of corporate governance at Tulane Law School. “If Twitter really blocked requests for information, and those requests for information were necessary or reasonable for Musk to obtain his funding – he claims in this letter – then it would in theory be a breach that would allow Musk to leave. ”

Twitter could, in turn, claim that it doesn’t have the information Mr. Musk requested or that the deal doesn’t need to be done, she said.

A deal is expected to be reached by October 24. If it is not concluded by then, each party can leave.

If the deal was still pending regulatory approval at that time, Mr. Musk and Twitter would still have six months to close.

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