What happened
Shares of Twitter (TWTR) are down 3.4% at 11:25 a.m. ET Monday morning after Elon Musk said he believed the social media messaging platform breached its merger agreement by failing to provide the information he asked for on bots and spam.
Weeks after agreeing to buy Twitter in a $44 billion deal, Musk seemingly started expressing doubts about the advisability of the deal. As tech stocks fell, the value of the company isn't looking as good as it was and Musk may have gotten a case of cold feet.
Image source: Getty Images.
So what
In a filing with the Securities and Exchange Commission (SEC) this morning, the Tesla (TSLA 4.96%) CEO's attorneys alleged Twitter "is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data due to concern for what Mr. Musk's own analysis of that data will uncover."
Musk is trying to determine how many fake accounts may actually populate Twitter, estimating it could be as much as 20% of total accounts. Twitter has countered that bots account for less than 5%, but Musk said recently the merger "cannot move forward" unless the platform provides proof that's the case.
Today's SEC filing said Musk believes Twitter "is actively resisting and thwarting his information rights," and reserves the right to terminate the merger.
Now what
Musk has lined up a group of investors who are backing his takeover efforts, but his actions have also shaken Tesla investors. The value of the electric car maker's stock has tumbled from over $1,060 per share when Musk announced the deal to $710 per share today.
The drumbeat of public criticism and doubt suggests Musk may be more interested in making his case for pulling out of the deal than completing it.
