Elon Musk is threatening to pull out of the $44 billion Twitter deal, alleging a ‘clear material breach’ while also accusing the company of ‘resisting and thwarting’ his right to information about fake accounts.
Twitter confirmed it had received Musk's proposal on 14 April, before the deal was confirmed on 25 April, with the final takeover set to take place by 24 October.
However, after Twitter accepted the offer, Musk later announced that the deal has been put on hold pending an investigation into the ratio of bot accounts to actual users, having repeatedly claimed that the site has more spam and fake accounts than it had previously admitted.
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The billionaire has now demanded Twitter provides further information on the validity of the platform’s accounts, with his attorney Mike Ringler arguing in a letter to the company – dated today, Monday 6 June – that the purchase agreement requires the company to provide the data Musk has requested.
Ringler also disputed Twitter’s alleged claim that it only needs to supply information for the ‘limited purpose’ of closing the deal, saying in the letter: “To the contrary, Mr. Musk is entitled to seek, and Twitter is obligated to provide, information and data for, inter alia, ‘any reasonable business purpose related to the consummation of the transaction’.
“At this point, Mr. Musk believes 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.”
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Ringler said that if Twitter was confident in its 'publicized spam estimates', Musk does not understand why it is so reluctant to allow him to independently evaluate the figures.
He also said Musk would agree to ensure anyone involved in reviewing the required data would be bound by a non-disclosure agreement, adding that he would not use any ‘competitively sensitive information’ if the deal doesn’t end up closing.
The attorney concluded: “Based on Twitter’s behavior to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement.
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“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”
Jess Hardiman