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No end in sight for Musk’s mean spat with Twitter chiefs

Adrian Weckler


Elon Musk is stalling on Twitter deal

Elon Musk is stalling on Twitter deal

Elon Musk is stalling on Twitter deal

Can Elon Musk legally back out of buying Twitter at the $44bn (£37bn) price agreed? No.

Will he nevertheless bully the company’s pathetic leadership into lowering the purchase price just because of his mean tweets? Almost certainly.

If you missed it, Musk says that the Twitter deal is “temporarily on hold”.

He has suddenly become concerned about the number of spam accounts on Twitter. Even though battling spam accounts was one of the original reasons (along with ‘free speech’) he gave for wanting to buy it.

Could Musk, the conqueror of low-orbit space, pioneer of the electric car, the nearest thing we have to a real life Iron Man, really be put off by the
possibility of more spam bots than he initially thought? Er, it seems unlikely.

Unfortunately, no-one has asked him whether his new-found reticence to close the Twitter deal has anything to do with Tesla’s share price crashing by 40%. So he doesn’t have to answer the question. (Tesla doesn’t have a press office.)

Instead, he gets softball, friendly interviews like the podcast exchange he had with venture capitalist Jason Calacanis.

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Calacanis: “Is this Twitter deal going to get closed do you think? What are the chances here?”

Musk: “It really depends on a lot of factors here. I’m still waiting for some sort of logical explanation for the number of fake or spam accounts on
Twitter, and Twitter is refusing to tell us.

“So, this just seems like a strange thing.”

Calacanis: “They say, Elon, that life is a negotiation, so at a different price, it might be a totally viable deal, correct?”

Musk: “It’s not out of the question. But the more questions I ask, the more my concerns are growing.”

Edgy stuff.

There is one obvious academic question: are there actually more than than 5% of Twitter’s accounts that are spam bots?

According to Twitter and one piece of independent research from SparkToro and Followerwonk, it doesn’t look like there are.

Musk, with his 95 million Twitter followers, gets a much higher percentage of spam account interaction — up to 25%, according to the SparkToro/ Followerwonk research — than the vast majority of those using Twitter.

But that’s normal for any giant user on most social media platforms. It doesn’t actually skew or contradict Twitter’s overall 5% statistic.

But even if there are far, far more spam bots than Twitter reported, would that be material?

Let’s say the figure is 10%, 20% or 30%, rather than 5%. Leave aside the fact that Musk apparently relished the task of taking on spam bots when making his initial approach for Twitter — can he now legally put the deal “temporarily on hold”?

I mean, if he can actually show that the spam bot figure might be more than Twitter’s estimate, does it materially affect his obligation to honour the purchase contract?

According to virtually every legal expert that has pored over this deal, the answer is “no”’. The excellent Matt Levine from Bloomberg had the best analysis.

“There is a popular view that Musk has the option to ditch the deal if he pays a $1bn break-up fee,” Levine wrote. “That just isn’t true. The contract gives Twitter the right to force him to close, and put up the $27.5bn of equity he has committed to the deal, as long as his debt financing is available. The contract also gives Twitter the right to go to court to force him to try to get that debt financing.

“There is, so far, no reason to think the debt financing won’t be there — his banks are large and solvent and have signed reasonably unconditional commitment letters — and so there is no reason to think he can get out of the deal.”

So it looks like Musk is on the hook here. Will that stop him renegotiating or backing out? Probably not.

He knows by now he can bully and harass Twitter’s board and senior leadership into bending to his will.

The company’s CEO, Parag Agrawal, is particularly weak, not standing up to Musk when Musk publicly humiliated senior Twitter executives on their
own platform.

Musk also possibly has the economics in his favour. Even a renegotiated lower price for Twitter would still be a huge premium on what the shares are
trading at now. If Musk bullies Twitter into meeting him in the middle — which they have no obligation to do, but are so spineless they probably will
— it would still represent a somewhat positive result for most shareholders.

Both parties also know that there are no other suitors for Twitter, and those shareholders may not have the patience to trust the board if it decides to fight Musk in court.

Either way, it should be another result for the mean tweets of Elon Musk.