[xeromal]

I don't know much about this specific situation, but isn't it pretty normal to lock in a price for purchase contingent on everything checking out.

It's not like you can go digging around in their databases looking for bot accounts until you have official access.

EDIT: Clearly people feel strongly about this so feel free to look at the comments below for some great answers. I'd ask for you to read before commenting though. I keep getting emails rehashing similar things.

[nightpool]

No, the whole point of the pre-merger negotiations is to grill the company on that kind of stuff before locking in the price. you don't get "official access" to anything until you've actually finished the transaction and paid for the company (partially for "don't string us along" reasons and partially for antitrust/collusion reasons). Musk decided to rush into this deal with very little negotiations and while waiving the standard due diligence, and now he's bored with it and creating a pretext to get himself out of it. It's insane to believe he really cares about the bot problem—fixing the problem of "too many bots in his mentions" was one of the reasons he bought the company to begin with!

[canucklady]

He explicitly waived any kind of due diligence, which is when you would normally agree to a price and make a conditional offer. His offer was unconditional.

[xeromal]

lol, that not a bright move. Hopefully someone hold's his feet to the fire.

[parmenidean]

Elon didn't agree to "deal contingent on everything checking out", he agreed to deal. Normally, this would have been vetted in due diligence, but Musk waived that period -- this is why the turnaround from "I might buy Twitter" to "I'm buying Twitter" was much, much faster than your typical acquisition talk. Matt Levine covered this better than I did, so I'll just quote his relevant section below:

“Temporarily on hold” is not a thing. Elon Musk has signed a binding contract requiring him to buy Twitter. Legions of bankers and lawyers and Twitter employees and special-purpose-vehicle promoters are working to fulfill his legal obligation to get the deal closed. “The parties hereto will use their respective reasonable best efforts to consummate and make effective the transactions contemplated by this Agreement,” says the merger agreement. (Section 6.3(a).) He can’t just put that “on hold.” That contract does not allow Musk to walk away if it turns out that “spam/fake accounts” represent more than 5% of Twitter users. We discussed this last month, when Twitter admitted in a securities filing that it had (slightly) overestimated its daily active users for years. The merger agreement contains a provision that allows Musk to walk away if Twitter’s securities filings are wrong — and this 5% number is in its securities filings — but only if the inaccuracy would have a “Material Adverse Effect” on the company. (See Sections 4.6(a) and 7.2(b).) That is an incredibly high standard: Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No. “Pending details supporting calculation” is not how this works. This disclosure — that “the average of false or spam accounts ... represented fewer than 5% of” Twitter’s monetizable daily active users — has been in Twitter’s securities filings for many years, always with a caveat that “in making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.” Musk had the opportunity to read these filings before offering to buy Twitter, and he had the opportunity to do due diligence on these numbers before signing the deal. (He declined.) He can’t now go to Twitter and say “actually now you need to prove that your user numbers are right.” If he wants to walk, he has to prove that they’re wrong, and also that they’re wrong in a way that has a material adverse effect on the business. Which he obviously can’t do.