Is Elon Musk going to walk away from Twitter deal?

Tesla CEO Elon Musk has threatened to walk away from his USD 44 billion bid to buy Twitter, accusing the company of refusing to give him information about its spam bot and fake accounts.

Musk's lawyers, in a letter to Twitter, wrote that Musk has repeatedly asked for the information since May 9, so he could evaluate how many of the company’s 229 million accounts are fake, reported AP.

Twitter shares were down 5.5% at USD 38.13 and were trading at a steep discount to Musk's offer of USD 54.20 per share, suggesting that investors did not expect the deal would close at the agreed price, reported Reuters.

This is the first time Musk has threatened to walk away from the deal in writing.

THE TWITTER DEAL

Musk, the world's richest man, struck a deal to buy Twitter for USD 44 billion on 26th April. Musk had bought a nine per cent stake in Twitter earlier in April, and then offered to buy the whole company outright.

Musk had agreed to pay USD 54.20 for every share of Twitter. 'Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,' he said in a statement.

THE SPAM BOT ISSUE

Musk has said that the real number of spam bots on Twitter may be four times higher than the company's estimates. Bots are fake accounts not controlled by a person, and can be used on social media to spread misinformation.

Twitter chief executive Parag Agrawal has said that fewer than five per cent of accounts active on any given day at Twitter are bots.

But Musk has been dismissive of Twitter's responses. Musk's attorney, Mike Ringler, said Twitter had failed to respond to Musk's valid inquiry about fake accounts, according to the filing, reported AFP.

WHAT'S NEXT?

After Musk threatened to walk out of the deal, Twitter shares were down 5.5% at USD 38.13 and were trading at a steep discount to Musk's offer of USD 54.20 per share.

The Twitter sale agreement allows Musk to get out of the deal if there is a “material adverse effect” caused by the company. It defines that as a change that negatively affects Twitter’s business or financial conditions, reported AP. If Musk walks away, he could be on the hook for a USD 1 billion breakup fee, which Twitter owed him for his 9 per cent stake in the company.