- Twitter was in a “clear material breach”
- Musk have all rights to terminate the merger agreement.
- The deal is currently on hold
Telsa CEO Elon Musk can walk away from his $44 billion deal to take Twitter Inc if the social media network fails to provide data on spam and fake accounts. The billionaire has warned in a letter to the company on Monday.
Twitter was in a “clear material breach” of its commitment and Mr. Musk has all rights to terminate the merger agreement. As said in a letter that Elon Musk wrote to the company.
This is the first time Mr. Musk has threatened to walk away from the deal in writing as opposed to airing it on Twitter’s social media platform.
Earlier in March, Musk said he would put the deal “temporarily on hold”, while he is waiting for the social media company to provide data on the number of its fake accounts.
According to the letter, “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,”.
Mr. 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%. Mr. 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.”
In the letter to the company, the lawyers made it clear that “Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his own and to facilitate his transaction financing,”
Mr. Musk has said that he has a number of 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 5.5% at $37.95 in early trading. Twitter did not immediately give any comment on this issue.