Elon Musk threatened to nuke his deal to buy Twitter if the company does not provide accurate data on the number of fake and spam accounts.
Musk also believes Twitter “is actively and thwarting his information rights.”
Mike Ringler, Musk’s lawyer, told Twitter CLO Vijaya Gadde that the company’s actions are “a clear material breach of Twitter’s obligations under the merger agreement and” his client is within his right to terminate the deal due to the misinformation:
As Twitter’s prospective owner, Mr. 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. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base. In any event, Mr. Musk is not required to explain his rationale for requesting the data, nor submit to the new conditions the company has attempted to impose on his contractual right to the requested data. 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.If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently evaluate those estimates. As noted in our previous correspondence, Mr. Musk will of course comply with the restrictions provided under Section 6.4, including by ensuring that anyone reviewing the data is bound by a non-disclosure agreement, and Mr. Musk will not retain or otherwise use any competitively sensitive information if the transaction is not consummated.
Right now the Twitter price tag is at $44 billion. Musk based this offer on the accuracy of Twitter’s SEC filings.
The social media platform claims spam and fake accounts only make up about 5% of all the accounts. It could be closer to 20%.
Musk first voiced his concerns in May.
CLICK HERE FOR FULL VERSION OF THIS STORY