Elon Musk warned on Monday that if Twitter Inc fails to give data on spam and false accounts, he may withdraw his $44 billion bid to buy the company.
In a letter to Twitter, the billionaire restated his request for information on bot accounts and stated that he reserves all rights to terminate the merger because the company failed to provide him with the information in a “clear significant breach” of its commitments.
Shares of Twitter plummeted as much as 5.6 percent to $37.92, trading at a significant discount to Musk’s offer of $54.20 a share, indicating that investors did not expect the deal to close at the agreed price. Last time they were down 2.7 percent.
“In order to complete the acquisition in accordance with the terms of the merger agreement, Twitter has and will continue to cooperatively exchange information with Musk,” the firm stated in a statement.
Read More: Elon Musk and the Twitter Takeover
Twitter has been updated. In mid-May, Musk put the acquisition “temporarily on hold,” stating he won’t proceed with it unless Twitter can show that spam bots account for less than 5% of its overall users.
The takeover process has taken several twists and turns since then, raising doubts about Musk’s intentions to complete the transaction at the agreed-upon price.
Despite the fact that Musk has frequently used social media to express his opinions on the acquisition and the company, this is the first time he has openly threatened to walk away.
“It’s quite evident that he has buyer’s remorse, and he’s doing everything he can to obtain a price drop, and I believe he’ll succeed,” Dennis Dick, a proprietary trader at Bright Trading LLC, said.
“You can see the sell-off in social media stocks, and he’s realized he overpaid […] all of these are price-cutting techniques.”
Musk has questioned Twitter’s public filings about spam accounts, alleging that they must account for at least 20% of the user base.
In one of his latest tweets, Twitter’s CEO, Parag Agrawal, expressed his dissatisfaction with the company’s handling of spam accounts.
Musk, a self-proclaimed free-speech absolutist, has stated that removing “spam bots” from the platform will be one of his top goals.
Tesla Inc. CEO Elon Musk controls 9.6% of Twitter and has over 95 million followers.
If Musk does not complete the deal, he is contractually forced to pay a $1 billion breakup fee – a portion of his $219 million fortune, according to Forbes.
Twitter can sue Musk for “particular performance” in order to compel him to complete the sale and win a settlement.
Musk stated in his letter that he required the data in order to do his own analysis of Twitter users and that he did not trust the company’s “loose testing processes.”
“He’s trying to back out of the Twitter transaction, and this is the first shot across the bow,” according to Wedbush analyst Dan Ives.
Musk has secured funding from a number of high-profile investors, including Saudi Arabian businessman Prince Alwaleed bin Talal and Sequoia Capital.