Elon Musk told Twitter Inc in a letter on Monday that if the social media network fails to share data on spam and bogus accounts, he may walk away from his $44 billion acquisition bid.
Twitter was in “clear material breach” of its duties, according to the letter, and Musk reserves the right to terminate the merger deal. This is the first time Musk has threatened to back out of the transaction in paper rather than on Twitter.
Musk’s warning that the acquisition was “on hold” had previously been dismissed by Twitter “, claiming that the information would aid him in preparing for his ownership of Twitter rather than being used to do due diligence and reopen negotiations.
Musk had previously stated that the deal would be placed “temporarily on hold” in March “, while he waits for statistics on the proportion of bogus accounts on the social media platform.
According to the letter, “Musk believes Twitter is openly refusing to comply with its obligations under the merger agreement, raising further suspicions that the firm is hiding the needed data.”
A self proclaimed free-speech absolutist, Musk has questioned the accuracy of Twitter‘s public filings about spam accounts representing less than 5% of its user base, claiming they must be at least 20%.
Musk said he needed the data to conduct his own analysis of Twitter users and did not believe in the company’s “lax testing methodologies.”
“Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter‘s business to his ownership and to facilitate his transaction financing,” his lawyers said in the letter.
Musk has said that he has lined up financing for the deal, through equity and loans, pulling in top shareholders including Saudi Arabian investor Prince Alwaleed bin Talal and Sequoia Capital. Twitter shares were down by 5.5% at $37.95 in early trading.