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In a letter sent to Twitter Monday morning, an attorney for Elon Musk wrote that the company “is actively resisting and thwarting his information rights” in regards to a dispute over spam accounts, and threatened to terminate the deal.
The letter, sent by a lawyer for Skadden Arps, follows a weeks-long back and forth between Musk and the company regarding how many active users of the service are real people, as opposed to bots or spam accounts. Musk, who declined due diligence early in the process, has since requested further data from the company, and also tweeted that the deal was “on hold,” although behind the scenes, work appears to have continued since then.
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The letter says that the company sent over information to Musk in a June 1 correspondence, but Musk responded that he wants to conduct his own analysis. “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,” the Monday letter reads.
Musk’s Monday letter to Twitter leaders ends on an ominous note, effectively threatening to terminate the deal if he is not given the requested data.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” it reads.
Of course, it isn’t immediately clear whether the threat is to be taken seriously, or whether Musk simply wants to negotiate a better price for the company. As of market open Monday, Twitter stock was trading at just over $40 per share, well below the $54.20 that Musk agreed to pay. A larger market correction in the tech space since Musk’s offer was accepted saw nearly every company in the sector lose market cap, and he may be looking for a way to get a discount.
That being said, the deal terms have been signed, and unless Twitter is in breach of the contract or there has been a serious change to Twitter’s business, it could be a difficult case to argue. But that won’t stop Musk and his team from trying.
In a statement later on Monday, Twitter said that it will continue to share data with Musk, and that it still intends “to close the transaction and enforce the merger agreement at the agreed price and terms.”