Elon Musk on Monday threatened to terminate his deal with Twitter to buy the company over it’s refusal to provide information regarding the number of fake accounts that are on the platform.
Musk, who has complained about bots and fake accounts on Twitter for years, believes the number is much higher than company executives have reported.
In a letter to the company, his attorney Mike Ringler accused Twitter of “resisting and thwarting” his right to information about the fake accounts, calling it a “clear material breach” of the terms of their merger agreement, according to CNBC.
“Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” the letter, Ringler said.
According to CNBC however, Musk “waived due diligence” when he made his offer “seemingly to hasten the acceptance of his bid.”
He wrote in a letter to Twitter chairman Bret Taylor on April 24, “As we discussed, $54.20 has been and will remain my best and final offer, period. This is binary – my offer will either be accepted or I will exit my position.”
Twitter announced the company had accepted his offer the next day.
But in the weeks that followed, Musk vocally criticized Twitter during media interviews and on Twitter where he has tens of millions of followers.
He announced in May that his $44 billion purchase of the company would not move forward until he had more information about the number of fake accounts on the service.
On May 17, the Tesla and SpaceX CEO suggested Twitter had included bad information in its financial filings. He wrote, “My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”
He said his team would do a random sampling to calculate the number of fake accounts, but Twitter’s CEO later explained that nonpublic information would be necessary to get an accurate count. Twitter executives told staff there’s “no such thing” as putting the deal on hold as Musk claimed, according to a report in Bloomberg.
Ringler disputed Twitter’s claim that they are not responsible to provide the bot data in order to close the deal.
“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,’” the letter stated.
“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,” it continued.
Ringler said Musk would agree to ensure that his team would be bound by non-disclosure agreements, and he would not use any “competitively sensitive information” if the deal didn’t close.
Prior to his takeover bid, Musk criticized Twitter’s failure to “adhere to free speech principles,” saying this “fundamentally undermines democracy.”
Soon after, the Securities and Exchange Commission (FEC) launched an investigation into Musk’s late submission of a public form that investors are required to file when they buy more than five percent of a company’s shares.
Then, in mid-May, Musk announced that he would be crossing the aisle to vote for Republicans for possibly the first time in the upcoming elections because he could “no longer support” Democrats.
On May 18, the mega billionaire said on Twitter that he had previously voted for Democrats “because they were (mostly) the kindness party,” but now “they have become the party of division & hate.”
Twitter shares were reportedly down five percent Monday morning.