Elon Musk accused Twitter of “resisting and thwarting” his right to information about fake accounts on the platform, calling it a “clear material breach” of the terms of their merger agreement in a letter to the company on Monday.
“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, signed by Skadden attorney Mike Ringler, says.
Twitter shares were down 5% in premarket trading on Monday.
Musk wrote on Twitter last month 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. Some analysts interpreted the move as a negotiation tactic for a lower price.
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.
In Monday’s letter, Musk’s lawyer wrote that the merger agreement requires Twitter to provide the data Musk requested and disputed the company’s alleged claim that it is only required to provide information for the limited purpose of helping to close the transaction.
“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 says.
“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 continues.
According to the letter, Musk would agree to ensure anyone reviewing the data would be bound by a non-disclosure agreement and he would not use any “competitively sensitive information” if the deal doesn’t close.
Twitter did not immediately respond to a request for comment.