June 6 (Reuters) – Elon Musk could 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 has warned in a letter to the company on Monday.
Twitter was in a “clear material breach” of its obligations and Musk reserves all rights to terminate the merger agreement, the letter states.
This is the first time Musk has threatened to walk away from the deal in writing instead of posting it on Twitter’s social media platform.
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Twitter had previously played down Musk’s warning that the deal was “on hold,” arguing that the data would help him prepare to own Twitter, not conduct due diligence and reopen negotiations. Read more
Earlier in March, Musk said he would put the deal “on hold” while waiting for the social media company to provide data on the proportion of his fake accounts.
“Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which heightens suspicions 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 records on spam accounts representing less than 5% of its user base, saying they must be at least 20% .
Musk said he needed the data to perform his own analysis of Twitter users and did not believe in the company’s “lax testing methodologies”.
“Musk is clearly entitled to the data requested to enable him to prepare for the transition of Twitter’s business to his ownership and to facilitate the financing of his transaction,” his attorneys said in the letter.
Musk said he has lined up funding for the deal, through equity and loans, by attracting major shareholders including Saudi investor Prince Alwaleed bin Talal and Sequoia Capital.
Twitter shares were down 5.5% at $37.95 in early trading.
Twitter did not immediately respond to a request for comment.
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Reporting by Nivedita Balu in Bengaluru; Editing by Anil D’Silva
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