Doubts are growing as to whether he will abide by his $ 44 billion deal to buy Twitter.
Mask’s lawyer, Mike Ringler, sent a letter to Twitter on Monday accusing the influential social network of refusing to provide additional information about Mask’s spam and fake accounts. The letter states that Musk wants to fully and accurately understand “the basis of Twitter’s business model – its active user base” before making a purchase.
“This is a clear violation of Twitter’s obligations under the merger agreement, and Mr. Mask reserves all rights arising from it, including the right not to complete the transaction and the right to terminate the merger agreement,” the letter said.
The letter is another sign that Mask, who runs both Tesla and SpaceX, may be cold-blooded when it comes to buying Twitter. Musk said the deal would not move forward until he found evidence that less than 5 percent of Twitter’s 229 million daily users were fake or spam-focused in the first quarter.
When the billionaire announced that he owned more than 9% of Twitter, Mask agreed to buy Twitter for $ 54.20. Musk also said there was no question of a lower price, but Twitter said he did not plan to discuss the price again.
Twitter spokesman Brenden Lee said the company would continue to share information with Musk to complete the acquisition.
“We believe that this agreement is in the interests of all shareholders. We intend to close the transaction and apply the merger agreement at an agreed price and terms,” he said.
The deal is yet to be approved by Twitter shareholders at a special meeting whose date has not yet been announced.
Here’s what you need to know about the ongoing saga between Musk and Twitter:
Why does Mask want to take to Twitter?
Musk is an avid user of the service, but also one of its most vocal critics.
Musk polled his followers in March to see if users believed Twitter was protecting free speech. He said the results of the survey, in which about 70% of the 2 million respondents answered “no”, would be “very important”.
“Given that Twitter serves as a de facto public square, non-compliance with the principles of freedom of expression undermines democracy. What should be done?” Musk said in his next tweet. He then offered to buy Twitter, saying he believed Twitter needed to be personal to achieve its goal.
The First Amendment to the US Constitution guarantees freedom of speech to government censorship of speech, but not to companies such as Twitter. Rules about things that are not allowed on their sites.
When Twitter announced the deal in April, Musk again referred to freedom of speech. He also said he wanted to improve Twitter with new features and promised to make the service’s algorithms open source, defeat spam bots and authenticate all people.
“Twitter has great potential,” Musk said. “I look forward to working with the company and the user community to open it.”
Progressives have criticized social media companies for failing to combat harmful content such as hate speech and harassment. Conservatives claim their speeches have been censored. (Twitter has long denied allegations that it censored conservatives.)
On April 19th Musk tweeted he thinks social media policy is “good when the extreme 10% on the right and left are equally unhappy.” He also said he would lift the ban He was expelled from the platform on January 6 after concerns about inciting violence following riots on Capitol Hill. Trump said the company has no plans to return to Twitter, even if it lifts the ban.
What was Twitter’s response?
At first, Twitter seemed to reject the offer, but after Musk offered details on how to finance the deal, the board began to take it more seriously. The company had adopted a defense strategy known as the “poison pill”, which would make it difficult for Mask to add to its stake in the company. This tactic allowed Twitter to accept a competitor’s offer.
Twitter co-founder Jack Dorsey On Twitter on April 15, he wrote, “As a public company, Twitter has always been ‘on sale.’ He said he didn’t believe who should own or manage Twitter, but that taking it back from Wall Street was the “first right step.”
Dorsey tweeted, “Elon, who solves the problem of this being a company, is the only solution I trust.” “I believe in his mission to expand the light of consciousness.”
The document submitted to the US Securities and Exchange Commission also sheds more light on how the deal came together. In March, Musk spoke with Twitter co-founder Jack Dorsey about the future of social media and the decentralization of social media so that users can have more control over their information and the content they see.
Mask’s attempt to gain access to Twitter failed. Mask refused to take a seat on Twitter’s board before proposing to privatize the company. Musk also spoke to Dorsey in early April, and Dorsey said he thought the publicly traded Twitter would be better as a private company.
How will Musk pay for Twitter?
Mask is said to be the richest man in the world with a fortune of $ 220 billion. Although he can afford a large purchase, he still requires some financial tricks.
In an initial presentation to the SEC on April 20, Musk said he had personally allocated about $ 21 billion to fund the shares. It has also secured about $ 25.5 billion in debt financing through Morgan Stanley and other financial institutions.
Since then, Musk has raised capital, presumably by selling $ 8.5 billion worth of Tesla shares for the deal, and attracting $ 7.1 billion to foreign investors. Sequoia Capital and Oracle co-founder Larry Ellison are among those investors, according to a May 4 appeal. (Ellison sits on Tesla’s board of directors.) Saudi investor Prince Al-Walid bin Talal Bin Abdulaziz Alsaud also agreed to pledge about 35 million shares in the deal.
On May 24, Musk promised more participation in the deal. It is now ready to invest $ 33.5 billion.
What happens next?
The deal still needs to be approved by shareholders, and there are speculations that Mask may withdraw. The SEC said on April 25 that the cancellation of the contract would cost Mask $ 1 billion due to the termination fee, which is part of the contract.
Musk claims that Twitter is violating the agreement by refusing to provide any information it wants about spam and fake accounts.
“Currently, Mr. Musk believes that Twitter is openly refusing to fulfill its obligations under the merger agreement, which raises more doubts that the company is hiding the required information. “Reveal it,” the letter said on Monday.
Attempts to accept it are likely to lead to more leadership changes on Twitter. CNBC reports that Musk is expected to serve as interim director general after the deal is signed. Parag Agraval, who took over from co-founder Jack Dorsey in November, is expected to stay until the sale is complete. According to Reuters, citing anonymous sources, Musk said that in addition to finding new ways to earn money, he will also curb the salaries of executives and board members. Last week,The CEO said he asked them to leave their jobs.
Bloomberg reported that the entrepreneur offered to cut jobs while signing the contract. He also told banks that Twitter’s influencers and celebrities need to be more active on the platform.