The Securities and Exchange Commission has broadened its investigation into Elon Musk’s acquisition of Twitter and has been pushing the billionaire for more information, according to filings made on Thursday.
Referring to a tweet made by Musk where he says he was unwilling to move ahead with the $44 billion acquisition deal because of the prevalence of bots on the platform, the SEC contends that this could call into questions the Tesla founder’s willingness to see the deal through.
This is the tweet that Musk made on May 17, regarding the bot issue on the social media platform:
20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.
My offer was based on Twitter’s SEC filings being accurate.
Yesterday, Twitter’s CEO publicly refused to show proof of <5%.
This deal cannot move forward until he does.
The SEC has zeroed in on the specific language used in the tweet, saying in their filing that the word ‘cannot’ implies that Musk and his associates are exercising their “legal legal right under the terms of the merger agreement to suspend completion of the acquisition of Twitter or otherwise do not intend to complete the acquisition.”
The regulator had pressed Musk to clearly explain whether or not he intended to buy out Twitter. In response, Musk’s attorney, Mike Ringler wrote to the SEC that there was no “material change” to the billionaire’s plans to acquire Twitter. However, that letter is likely to come back to haunt the SpaceX founder as last week he very publicly announced that he would be terminating the deal. Musk’s filing with the SEC said that because of Twitter’s failure to report on the true number of bots on its platforms, the platform, upon acquisition could cause a “Material Adverse Effect” thereby affecting the value of the company.
Twitter hit back with a lawsuit filed in the Delaware Court of Chancery and is looking to ensure that Musk is either forced to buy out the microblogging site or pay the separation fee. However, given that Chancellor Kathaleen McCormick is presiding over the case, and is known for forcing a reluctant company to complete an acquisition, the odds are unlikely to be in Musk’s favour.