Elon Musk may walk away from his $44 billion deal to acquire Twitter Inc (TWTR.N) if the social media network fails to provide data on spam and fake accounts, the billionaire warned in a letter to the company on Monday.
Twitter was in a “clear material breach” of its obligations and that Musk reserves all rights to terminate the merger agreement, the letter said.
This is the first time Musk has threatened to walk away from the deal in writing as opposed to airing it on Twitter’s social media platform.
Twitter had previously downplayed Musk’s warning that the deal was “on hold”, arguing that the data would help him prepare for his ownership of Twitter, not to carry out due diligence and reopen negotiations.
Earlier in March, Musk said he would put the deal “temporarily on hold”, while he waits for the social media company to provide data on the proportion of its fake accounts.
“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,” according to the letter.
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.